<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 September 30, 1999

                                       or

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

                For the transition period from _______ to _______

                         Commission File Number: 0-22299

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

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

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

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

                                 YES [X] NO [ ]

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

The number of shares of common stock, par value $.001 per share, outstanding
as of November 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 September 30, 1999........................            3

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

                    Condensed Consolidated Statement of  Stockholders'
                    Equity - Nine Months Ended September 30, 1999...................            5

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

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

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

           Item 3.  Quantitative and Qualitative Disclosures About Market Risk......           23

PART II.  OTHER INFORMATION

           Item 1.  Legal Proceedings...............................................           24

           Item 2.  Changes in Securities and Use of Proceeds.......................           24

           Item 3.  Defaults Upon Senior Securities.................................           24

           Item 4.  Submission of Matters to a Vote of Security Holders.............           24

           Item 5.  Other Information...............................................           24

           Item 6.  Exhibits and Reports on Form 8-K................................           24

SIGNATURES..........................................................................           25

</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,      SEPTEMBER 30,
                                  ASSETS                                         1998              1999
                                                                             ------------      -------------
                                                                                                (unaudited)
<S>                                                                          <C>               <C>
Real estate properties:
   Operating properties, net of accumulated depreciation.................    $     23,117      $      29,295
   Properties under development..........................................          79,418             88,477
   Land held for future development or sale..............................           1,349             16,402
                                                                             ------------      -------------
     Total real estate properties........................................         103,884            134,174

Cash and cash equivalents................................................           1,331              5,549
Due from Tax Credit Partnerships.........................................          31,997             37,586
Construction contracts receivable, net of allowance for doubtful
   accounts of $403 at December 31, 1998 and $231 at September 30, 1999             8,773              5,372
Costs and estimated earnings in excess of billings on
   uncompleted contracts.................................................           2,618              2,100
Notes receivable.........................................................           1,000              1,117
Investments in joint ventures............................................           3,577              3,598
Due from related parties.................................................             154                148
Prepaid expenses and other assets........................................          17,661             19,429
                                                                             ------------      -------------
         Total assets....................................................    $    170,995      $     209,073
                                                                             ============      =============

                   LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable and accrued expenses....................................    $     24,892      $      29,486
Tenant deposits and other liabilities....................................           6,295              6,375
Billings in excess of costs and estimated earnings
   on uncompleted contracts..............................................             181                940
Notes payable............................................................          88,306            115,485
Notes payable to related parties.........................................          12,016             11,662
Long-term capital lease obligations......................................           1,118              1,091
                                                                             ------------      -------------
         Total liabilities...............................................         132,808            165,039

Commitments and contingencies (note 11)

Stockholders' equity:
Common stock, $.001 par value.  Authorized 50,000,000
   shares; issued and outstanding 7,732,922 at December 31, 1998
   and September 30, 1999................................................               8                  8
Preferred stock, $.001 par value. Authorized 5,000,000
   shares; no shares issued and outstanding..............................               -                  -
Additional paid-in capital...............................................          21,482             21,482
Retained earnings........................................................          16,697             22,544
                                                                             ------------      -------------
         Total stockholders' equity......................................          38,187             44,034
                                                                             ------------      -------------

         Total liabilities and stockholders' equity......................    $    170,995      $     209,073
                                                                             ============      =============
</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           NINE MONTHS ENDED
                                                                                 SEPTEMBER 30,               SEPTEMBER 30,
                                                                            -----------------------    ----------------------
                                                                               1998          1999         1998          1999
                                                                            ----------    ---------    ----------   -----------
<S>                                                                         <C>           <C>          <C>          <C>
REVENUE:
   Construction revenue, including Tax Credit
     Partnership construction revenue of $11,254 and $4,024
     for the three months ended September 30, 1998 and 1999,
     respectively, and $25,389 and $14,887 for the nine months ended
     September 30, 1998 and 1999, respectively...........................   $  11,777     $   4,989    $   30,909   $    17,156
   Sales of homes........................................................       6,110        29,013        15,070        76,115
   Sales of commercial properties........................................           -         3,214         3,819         4,901
   Rental revenue........................................................         802           815         2,569         2,669
   Other revenue.........................................................         309           619         1,209         1,778
                                                                            ----------    ---------    ----------   -----------
         Total revenue...................................................      18,998        38,650        53,576       102,619
                                                                            ----------    ---------    ----------   -----------
COST OF REVENUE:
   Cost of construction, including Tax Credit Partnership cost of
     construction of $8,735 and $3,078 for the three months ended
     September 30, 1998 and 1999, respectively, and $18,785 and $10,768
     for the nine months ended September 30, 1998 and 1999,
     respectively........................................................       9,469         4,447        24,236        14,284
   Cost of homes sold....................................................       5,269        25,403        12,805        66,286
   Cost of commercial properties sold....................................           -         3,156         3,500         4,180
   Rental operating cost.................................................         200           159           622           682
                                                                            ----------    ---------    ----------   -----------
         Total cost of revenue...........................................      14,938        33,165        41,163        85,432
                                                                            ----------    ---------    ----------   -----------

   Gross profit..........................................................       4,060         5,485        12,413        17,187
                                                                            ----------    ---------    ----------   -----------
   General and administrative expense....................................       1,164         2,606         3,600         6,528
   Depreciation and amortization.........................................         431           627         1,197         1,735
                                                                            ----------    ---------    ----------   -----------
         Operating income................................................       2,465         2,252         7,616         8,924
                                                                            ----------    ---------    ----------   -----------
OTHER EXPENSE:
   Interest expense, net of interest income of $201 and $354 for the
     three months ended September 30, 1998 and 1999, respectively, and
     $764 and $832 for the nine months ended September 30, 1998 and
     1999, respectively..................................................        (523)         (131)       (1,347)         (710)
   Joint venture loss....................................................         (10)           (5)          (16)          (29)
                                                                            ----------    ---------    ----------   -----------
         Total other expense.............................................        (533)         (136)       (1,363)         (739)
                                                                            ----------    ---------    ----------   -----------
Income before provision for income taxes.................................       1,932         2,116         6,253         8,185
Provision for income taxes...............................................         561           593         1,900         2,338
                                                                            ----------    ---------    ----------   -----------
         Net income......................................................   $   1,371     $   1,523    $    4,353   $     5,847
                                                                            ==========    ==========   ==========   ===========
EARNINGS PER COMMON SHARE:
BASIC:
Net income...............................................................   $    0.18     $    0.20    $     0.57   $      0.76
                                                                            ==========    ==========   ==========   ===========
Weighted-average number of common shares outstanding.....................   7,661,422     7,732,922     7,649,187     7,732,922
                                                                            ==========    ==========   ==========   ===========
DILUTED:
Net income...............................................................   $    0.18     $    0.20    $     0.57   $      0.76
                                                                            ==========    ==========   ==========   ===========
Weighted-average number of common shares outstanding assuming
   dilution..............................................................   7,661,781     7,733,089     7,655,978     7,734,047
                                                                            ==========    ==========   ==========   ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                      4
<PAGE>



                      SAXTON INCORPORATED AND SUBSIDIARIES

            CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                      NINE MONTHS ENDED SEPTEMBER 30, 1999
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                  ADDITIONAL
                                                    SHARES           COMMON         PAID-IN         RETAINED
                                                 OUTSTANDING         STOCK          CAPITAL         EARNINGS         TOTAL
                                                 -----------        --------      ----------       ----------      ----------
<S>                                               <C>               <C>           <C>              <C>             <C>
Balance at December 31, 1998...............          7,733          $     8        $ 21,482        $ 16,697        $ 38,187
Net income for the nine months
   ended September 30, 1999 (unaudited)....              -                -               -           5,847           5,847
                                                 -----------        --------      ----------       ----------      ----------
Balance at September 30, 1999 (unaudited)..          7,733          $     8        $ 21,482        $ 22,544        $ 44,034
                                                 ===========        ========      ==========       ==========      ==========
</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>
                                                                                       NINE MONTHS ENDED
                                                                                          SEPTEMBER 30,
                                                                                 ------------------------------
                                                                                      1998            1999
                                                                                 --------------  --------------
  <S>                                                                            <C>             <C>
  CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income............................................................       $   4,353         $   5,847
     Adjustments to reconcile net income to net cash used in
       operating activities:
         Depreciation and amortization.....................................           1,197             1,735
         Gain on sales of commercial properties............................            (310)             (906)
         Joint venture loss................................................              16                29
         Increase in Investments in joint ventures.........................               -               (50)
         Changes in operating assets and liabilities:
           Increase in Due from Tax Credit Partnerships....................         (18,377)           (5,161)
           Decrease (increase) in Construction contracts receivable........            (599)            3,401
           Decrease in Costs and estimated earnings in excess of billings
             on uncompleted contracts......................................           2,020               518
           Increase in Properties under development........................         (19,875)          (32,138)
           Increase in Prepaid expenses and other assets...................          (2,208)           (2,570)
           Increase in Accounts payable and accrued expenses ..............           6,208             4,594
           Increase (decrease) in Billings in excess of costs and
             estimated earnings on uncompleted contracts...................            (458)              759
           Increase in Tenant deposits and other liabilities...............           6,591                80
                                                                                 --------------  --------------
                    Net cash used in operating activities..................         (21,442)          (23,862)
                                                                                 --------------  --------------
  CASH FLOWS FROM INVESTING ACTIVITIES:
     Expenditures for property acquisitions and improvements...............         (10,053)           (2,686)
     Proceeds from Sales of commercial properties..........................             984             4,901
     Increase in Notes receivable from related parties ....................             (33)              (83)
     Payments from Notes receivable from related parties...................              54                89
     Increase in Notes receivable..........................................            (750)           (1,046)
     Payments from Notes receivable........................................           2,468               251
     Cash paid to acquire net assets of Maxim Homes, Inc...................            (793)                -
                                                                                 --------------  --------------
                    Net cash provided by (used in) investing activities....          (8,123)            1,426
                                                                                 --------------  --------------
  CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of Notes payable...............................          63,994            95,997
     Payments on Notes payable and capital lease obligations...............         (34,140)          (68,989)
     Proceeds from issuance of Notes payable to related parties ...........               -             2,472
     Payments on Notes payable to related parties .........................               -            (2,826)
                                                                                 --------------  --------------
                    Net cash provided by financing activities..............          29,854            26,654
                                                                                 --------------  --------------
                    Net increase in cash and cash equivalents..............             289             4,218
     Cash and cash equivalents:
        Beginning of period................................................           1,110             1,331
                                                                                 --------------  --------------
        End of period......................................................       $   1,399         $   5,549
                                                                                 ==============  ==============
</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>
                                                                                     NINE MONTHS ENDED
                                                                                        SEPTEMBER 30,
                                                                               ------------------------------
                                                                                    1998            1999
                                                                               --------------  --------------
  <S>                                                                           <C>              <C>
 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid during the period for interest, net of amounts capitalized       $   2,805         $   1,522
                                                                               ==============  ==============
     Cash paid during the period for income taxes........................       $   3,122         $     509
                                                                               ==============  ==============
 NON-CASH FINANCING AND INVESTING ACTIVITIES:
     Common stock issued to acquire net assets of
       Maxim Homes, Inc..................................................       $     338         $       -
                                                                               ==============  ==============
     Capital lease obligation recorded in connection with equipment
       acquisitions......................................................       $      41         $     144
                                                                               ==============  ==============
     Recognition of revenue for the prior sale of a commercial
       property which was subject to certain conditions..................       $   2,834         $       -
                                                                               ==============  ==============
     Amounts due from related parties applied to notes payable to
       related parties...................................................       $     265         $       -
                                                                               ==============  ==============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       7
<PAGE>
                      SAXTON INCORPORATED AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

NOTE 1.   DESCRIPTION OF SAXTON INCORPORATED

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

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

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

NOTE 2.   ACQUISITIONS

     On March 20, 1998, the Company acquired all of the capital stock of
Maxim Homes, Inc. ("Maxim"), a Utah homebuilder. The acquisition was
accounted for using the purchase method of accounting. Maxim operates
principally as a single-family residential homebuilder, specializing in
building homes generally ranging in price from $145,000 to $185,000. The
consideration paid at closing for this acquisition consisted of: (i) $224,000
in cash; (ii) approximately $338,000 in the Company's Common Stock (42,280
shares valued at $8.00 per share); and (iii) $569,000 in cash to retire a
portion of Maxim's debt. In addition, the Company may make five annual
installments ("earn-out payments") on March 31 of each year beginning in
1999, subject to certain levels of required income. These earn-out payments are
based on a specified percentage of estimated after-tax net income of the Salt
Lake City real estate operations of the Company and are to be made 50% in the
Company's Common Stock and 50% in cash. No earn-out payments were required to
be paid by the Company and no earn-out payments were paid during 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 which was paid through September 30,
1999, with an additional $2.0 million to be paid 50% in cash and 50% in the
Company's Common Stock one year from the date of closing. On November 15,
1999, one year from the date of closing and pursuant to the purchase agreement,
the Company issued 146,391 shares of the Company's Common Stock to fulfill the
stock payment obligation. Of the $1.0 million to be paid in cash; $300,000 has
been paid through September 30, 1999 and the remaining approximately $700,000
payment has been extended to December 6, 1999.

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

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

                                      8
<PAGE>

    The percentage of total revenue by geographic area for the three and nine
months ended September 30, 1998 and 1999 are as follows:
<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED             NINE MONTHS ENDED
                                                       SEPTEMBER 30,                  SEPTEMBER 30,
                                                  ----------------------         ---------------------
                                                      1998        1999             1998         1999
                                                  ----------    ---------        ---------    --------
<S>                                               <C>          <C>              <C>          <C>
                   Arizona.................             -%         47.5%               -%         44.2%
                   Nevada..................          86.6          49.4             92.1          47.5
                   Utah....................          13.4           3.1              7.9           8.3
                                                  ----------    ---------        ---------    --------

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

NOTE 3.   BASIS OF PRESENTATION

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

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

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

NOTE 4.   REAL ESTATE OPERATING PROPERTIES

    Real estate operating properties are summarized as follows (in thousands):
<TABLE>
<CAPTION>
                                                               DECEMBER 31, 1998     SEPTEMBER 30, 1999
                                                               -----------------     ------------------
                                                                                         (unaudited)
<S>                                                            <C>                   <C>
                Cost:
                 Buildings.................................    $         19,530      $          24,447
                 Tenant improvements.......................                 761                    653
                 Land......................................               6,122                  7,599
                                                               -----------------     ------------------
                Real estate operating properties at cost...              26,413                 32,699

                   Less accumulated depreciation and
                     amortization..........................              (3,296)                (3,404)
                                                               -----------------     ------------------

                Real estate operating properties, net......    $         23,117      $          29,295
                                                               ==================    ===================
</TABLE>

    Depreciation expense relating to real estate operating properties for the
three months ended September 30, 1998 and 1999 was $193,000. Depreciation
expense relating to real estate operating properties for the nine months
ended September 30, 1998 and 1999 was $543,000 and $539,000, respectively.

                                      9
<PAGE>
NOTE 5.   CONSTRUCTION CONTRACTS

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

    Accounts payable and accrued expenses include amounts retained pending
subcontract completion, aggregating approximately $3.1 million at December
31, 1998 and $3.3 million at September 30, 1999.

    Costs and estimated earnings in excess of billings, net, on uncompleted
contracts, are summarized as follows (in thousands):
<TABLE>
<CAPTION>
                                                               DECEMBER 31, 1998     SEPTEMBER 30, 1999
                                                               -----------------     ------------------
                                                                                         (unaudited)
<S>                                                            <C>                   <C>
                Costs incurred to date.....................    $         98,470      $         112,047
                Estimated earnings to date.................              30,694                 35,070
                                                               -----------------     ------------------
                                                                        129,164                147,117
                Less billings to date......................            (126,727)              (145,957)
                                                               -----------------     ------------------
                 Cost and estimated earnings in excess of
                   billings, net...........................    $          2,437      $           1,160
                                                               =================     ==================
</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     SEPTEMBER 30, 1999
                                                               -----------------     ------------------
                                                                                         (unaudited)
<S>                                                            <C>                   <C>
                Costs and estimated earnings in excess of
                   billings on uncompleted contracts.......    $          2,618      $           2,100
                Billings in excess of costs and estimated
                   earnings on uncompleted contracts.......                (181)                  (940)
                                                               -----------------     ------------------
                Costs and estimated earnings in excess of
                   billings, net...........................    $          2,437      $           1,160
                                                               =================     ==================
</TABLE>

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

NOTE 6.   PREPAID EXPENSES AND OTHER ASSETS

    Prepaid expenses and other assets consist of the following (in thousands):
<TABLE>
<CAPTION>
                                                                   DECEMBER 31, 1998     SEPTEMBER 30, 1999
                                                                   -----------------     ------------------
                                                                                             (unaudited)
<S>                                                                <C>                   <C>
    Rental and other accounts receivable.........................  $           575       $          2,033
    Goodwill.....................................................            7,877                  7,484
    Development costs............................................            2,598                  4,892
    Deferred tax assets, net.....................................               74                     95
    Furniture and equipment, net.................................            1,379                  1,369
    Option and escrow deposits and impounds......................            3,087                  1,832
    Inventories..................................................              101                      -
    Other assets, primarily prepaid expenses and loan fees.......            1,970                  1,724
                                                                   -----------------     ------------------
                                                                   $        17,661       $         19,429
                                                                   =================     ==================
</TABLE>

                                      10
<PAGE>

<TABLE>
<CAPTION>

NOTE 7.   NOTES PAYABLE

    Notes payable consist of the following (in thousands):                         DECEMBER 31,       SEPTEMBER 30,
                                                                                       1998               1999
                                                                                   -------------      -------------
                                                                                                      (unaudited)
<S>                                                                                <C>                <C>
    Notes payable to various financial institutions, maturing at dates ranging
      between November 1999 and November 2027. The notes bear interest
      monthly at various rates ranging from 7.9% to 13.0%. (1)(2)................      $72,328          $ 89,174


    Notes payable to various individuals, maturing at dates ranging between
     October 1999 and November 2000. The notes bear interest at various
      rates ranging from 15.0% to 36.0%..........................................       15,875            26,311

    Other........................................................................          103                 -
                                                                                    -----------     ------------

                                                                                       $88,306          $115,485
                                                                                    ==========      ============
</TABLE>

    (1) On February 9, 1998, the Company entered into a $10.0 million
revolving loan agreement with a financial institution. The line of credit
provides for borrowings of up to $1.0 million for general working capital
requirements, $4.0 million for acquisition and development, including
strategic acquisitions, and $5.0 million for land acquisitions. Borrowing
under the line of credit is secured by the pledge of certain Company
receivables and any land acquired with borrowings under the line of credit
and bears interest at one percent over the lender's prime rate in effect from
time to time. The agreement is also subject to certain financial covenants
and restrictions. The revolving working capital line for $1.0 million is
payable on November 30, 1999, the maturity date, and the remainder is payable
one year and one day following each advance. These due dates range from
December 1, 2000 to September 14, 2001. As of December 31, 1998 and September
30, 1999, the Company had outstanding indebtedness of $5.0 million and $8.9
million, respectively, and available borrowings of $5.0 million and $1.1
million, respectively, under this agreement. The $1.1 million availability is
for land acquisitions only.

    (2) On July 30, 1997, the Company entered into a $5.0 million revolving line
of credit with a financial institution. Loans under the agreement bear monthly
interest at 1.5% above the prime rate as defined in the agreement (9.25% at
December 31, 1998 and 9.75% at September 30, 1999), and require the Company to
pay a loan fee of 0.25% for each disbursement. Loans under the agreement are
available only for the acquisition of land and are secured by first trust deeds
on certain real property. As of December 31, 1998 and September 30, 1999, the
Company had outstanding indebtedness of $1.9 million and available borrowings of
$3.1 million under the agreement. Under the terms of the agreement, the Company
is required to meet certain financial covenants.

    During 1998 and 1999, the Company entered into various notes payable
representing borrowings from an unaffiliated individuals. These notes bear
interest and mature on the following dates:

<TABLE>
<CAPTION>

<S>                 <C>                          <C>                        <C>
                    Principal Balance             Interest Rate                Maturity Date
                    -----------------            ---------------            ---------------------
                          $  530,000                     36%                 October 8, 1999  (1)
                           1,000,000                     24%                 December 16, 1999 (2)
                             846,000                     20%                 December 19, 1999 (3)
                           1,000,000                     20%                 March 17, 2000
                           1,525,000                     24%                 March 23, 2000
                             985,000                     20%                 June 26, 2000
                             430,000                     24%                 June 30, 2000
                           4,820,000                     15%                 August 1, 2000
                           1,000,000                     24%                 September 3, 2000
                           7,520,000                     20%                 September 10, 2000
                           5,655,000                     20%                 September 28, 2000
                           1,000,000                     20%                 November 20, 2000

</TABLE>

                (1) This was a 30 day loan and was paid in full on October 8,
1999.
                (2) The Company intends to pay this loan in full.
                (3) The Company intends to renew this loan with the lender.

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 19% per
annum, with all amounts due at various dates in 2000. During the first quarter
of 1999, the Company borrowed $724,000 and $300,000 from the Company's President
and principal stockholder, James C. Saxton. The notes

                                     11

<PAGE>

mature on February 1, 2000 and bear interest at 19% and 18% per annum,
respectively. During the second quarter of 1999, the Company's Executive Vice
President, Michele Pori, pledged 530,000 shares of Common Stock, or 6.9% of
its outstanding shares, as collateral for a $1.2 million personal loan. Ms.
Pori reloaned the proceeds to the Company. The note payable bears interest at
12% per annum and matures on February 3, 2000. At September 30, 1999, the
outstanding balance was $1.2 million. The Company used the proceeds from
these loans for general operating expenses.

    During the fourth quarter of 1998, Mr. Saxton pledged 3,471,590 shares of
Common Stock, or approximately 44.9% of its outstanding shares, as collateral
for two personal loans to Mr. Saxton and three loans to the Company. Mr.
Saxton reloaned the proceeds from the two personal loans to the Company for
use in connection with the acquisition of Diamond Key. The two notes payable
to Mr. Saxton originally aggregating $7.6 million bear interest at 12% per
annum and mature on February 1, 2000. At September 30, 1999, the outstanding
balance was $6.4 million on these loans. 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.

    The two personal loans Mr. Saxton has outstanding and the personal loan
Ms. Pori has outstanding, aggregating $7.6 million, are currently past their
maturity date of September 3, 1999. Although the principal amounts are past
due, the interest payments are current. The Company is negotiating with the
lender to restructure the loans. There is no guarantee that the Company will
be successful in doing so. The lender, to-date, has not issued a demand for
repayment of any of the loans.

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 SEPTEMBER 30, 1998          THREE MONTHS ENDED SEPTEMBER 30, 1999
                             -------------------------------------------------------------------------------------------
                                                             PER-SHARE                                       PER-SHARE
                               INCOME          SHARES         AMOUNT          INCOME          SHARES          AMOUNT
                             -------------------------------------------------------------------------------------------
<S>                          <C>             <C>           <C>            <C>              <C>             <C>
Net income.................        $1,371                                       $1,523

BASIC EPS
Income applicable to
  common stockholders......         1,371       7,661,422        $0.18           1,523         7,732,922           $0.20
                              -----------     -----------   ===========    -----------       -----------     ===========
Effect of dilutive
securities:
  Stock options............             -             359                            -               167
                              -----------     -----------                  -----------       -----------
DILUTED EPS
Income applicable to
  common stockholders
  and assumed conversions..        $1,371       7,661,781        $0.18          $1,523         7,733,089           $0.20
                              ===========     ===========   ===========     ===========      ===========     ===========

</TABLE>


<TABLE>
<CAPTION>

                                NINE MONTHS ENDED SEPTEMBER 30, 1998           NINE MONTHS ENDED SEPTEMBER 30, 1999
                             -------------------------------------------------------------------------------------------
                                                             PER-SHARE                                       PER-SHARE
                               INCOME          SHARES         AMOUNT          INCOME          SHARES          AMOUNT
                             -------------------------------------------------------------------------------------------
<S>                          <C>             <C>           <C>            <C>              <C>             <C>
Net income.................        $4,353                                        $5,847

BASIC EPS
Income applicable to
  common stockholders......         4,353       7,649,187        $0.57            5,847        7,732,922           $0.76
                              -----------     -----------   ===========    -----------       -----------     ===========
Effect of dilutive
securities:
  Stock options............             -           6,791                             -            1,125
                              -----------     -----------                  -----------       -----------
DILUTED EPS
Income applicable to
  common stockholders
  and assumed conversions..        $4,353       7,655,978        $0.57           $5,847        7,734,047           $0.76
                              ===========     ===========   ===========     ===========      ===========     ===========

</TABLE>

    The Company had options and warrants outstanding to purchase Common Stock
that were excluded from the computation of Diluted EPS since their exercise
price was greater than the average market price. The antidilutive options and
warrants for the nine months ended September 30, 1998 and 1999 were 415,800
and 732,548, respectively. The antidilutive options and warrants for the
nine months ended September 30, 1998 and 1999 were 617,900 and 761,998,
respectively.

                                     12

<PAGE>

NOTE 10.   MANAGEMENT STOCK OPTION PLAN

    On June 30, 1997, the Company adopted a Management Stock Option Incentive
Plan (the "Option Plan") which provides for the grant of options to employees to
purchase Common Stock up to a maximum of 500,000 shares. Stock options which
terminate without having been exercised, shares forfeited or shares surrendered
will again be available for distribution in connection with future awards under
the Option Plan. On December 7, 1998, the Company's Board of Directors approved
an increase from 500,000 to 750,000 in the number of shares subject to stock
options under the Option Plan. The increase was approved by the stockholders at
the annual meeting of stockholders in June 1999. As of September 30, 1999, the
Company had 447,900 stock options outstanding 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 September 30, 2009. Stock options granted
on June 30, 1997 were issued at an exercise price equal to the initial public
offering price of $8.25 per share. Stock options granted after June 30, 1997
were granted at the closing stock price on the grant date as reported on the
Nasdaq Stock Market. On January 2, 1998, the Company gave employees the
opportunity to reprice their stock options. The repricing involved changing
their stock price from $8.25 per share to $6.875 per share (the closing stock
price on January 2, 1998) and changing their grant date from June 30, 1997 to
January 2, 1998. Employees holding 148,300 stock options elected to reprice on
January 2, 1998. As of September 30, 1999, stock options had been granted under
the Option Plan with exercise prices ranging from $3.625 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
$26.9 million at December 31, 1998 and September 30, 1999, respectively.

NOTE 12.   INFORMATION REGARDING BUSINESS SEGMENTS

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

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

                                     13
<PAGE>

<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED SEPTEMBER 30, 1998
                            --------------------------------------------------------------------------------------------
                                                                SALES OF         PROPERTY
                             DESIGN-BUILD                      COMMERCIAL     OPERATIONS AND
                               SERVICES      HOMEBUILDING       PROPERTY        MANAGEMENT        OTHER        TOTAL
                            --------------------------------------------------------------------------------------------
<S>                         <C>              <C>             <C>             <C>               <C>          <C>
Revenue...................        $11,777          $ 6,110     $         -          $   802        $  309      $ 18,998
Costs.....................          9,469            5,269               -              200             -        14,938
                              -----------      -----------     -----------      -----------     ---------     ---------
   Gross profit...........        $ 2,308          $   841     $         -          $   602        $  309      $  4,060
                              ===========      ===========     ===========      ===========     =========     =========
Depreciation and
   amortization expense...        $     -          $     4     $         -          $   194        $  233      $    431

Interest expense..........        $     -          $    (1)    $         -          $  (536)       $ (187)     $   (724)
Interest income...........        $     -          $     -     $         -          $   201        $    -      $    201

Total assets..............        $47,232          $29,713     $         -          $48,331        $8,827      $134,103

</TABLE>

<TABLE>
<CAPTION>

                                                       THREE MONTHS ENDED SEPTEMBER 30, 1999
                            --------------------------------------------------------------------------------------------
                                                                SALES OF         PROPERTY
                             DESIGN-BUILD                      COMMERCIAL     OPERATIONS AND
                               SERVICES      HOMEBUILDING       PROPERTY        MANAGEMENT        OTHER        TOTAL
                            --------------------------------------------------------------------------------------------
<S>                         <C>              <C>             <C>             <C>               <C>          <C>
Revenue...................        $ 4,989         $ 29,013          $3,214          $   815        $  619      $ 38,650
Costs.....................          4,447           25,403           3,156              159             -        33,165
                              -----------      -----------     -----------      -----------     ---------     ---------
   Gross profit...........        $   542         $  3,610          $   58          $   656        $  619      $  5,485
                              ===========      ===========     ===========      ===========     =========     =========
Depreciation and
   amortization expense...        $     -         $    116          $    -          $   181        $  330      $    627

Interest expense..........        $     -         $      -          $    -          $  (474)       $  (11)     $   (485)
Interest income...........        $    (8)        $     20          $    -          $   342        $    -      $    354

Total assets..............        $48,342         $104,924          $    -          $48,162        $7,645      $209,073

</TABLE>

<TABLE>
<CAPTION>

                                                       NINE MONTHS ENDED SEPTEMBER 30, 1998
                            --------------------------------------------------------------------------------------------
                                                                SALES OF         PROPERTY
                             DESIGN-BUILD                      COMMERCIAL     OPERATIONS AND
                               SERVICES      HOMEBUILDING       PROPERTY        MANAGEMENT        OTHER        TOTAL
                            --------------------------------------------------------------------------------------------
<S>                         <C>              <C>             <C>             <C>               <C>          <C>
Revenue...................        $30,909          $15,070          $3,819          $ 2,569        $1,209      $ 53,576
Costs.....................         24,236           12,805           3,500              622             -        41,163
                              -----------      -----------     -----------      -----------     ---------     ---------
   Gross profit...........        $ 6,673          $ 2,265          $  319          $ 1,947        $1,209      $ 12,413
                              ===========      ===========     ===========      ===========     =========     =========
Depreciation and
   amortization expense...        $     -          $     7          $    -          $   542        $  648      $  1,197

Interest expense..........        $     -          $    (1)         $    -          $(1,579)       $ (531)     $ (2,111)
Interest income...........        $     -          $     -          $    -          $   739        $   25      $    764

Total assets..............        $47,232          $29,713          $    -          $48,331        $8,827      $134,103

</TABLE>
                                     14
<PAGE>


<TABLE>
<CAPTION>
                                                       NINE MONTHS ENDED SEPTEMBER 30, 1999
                                ----------------------------------------------------------------------------------------
                                                                  SALES OF         PROPERTY
                                DESIGN-BUILD                      COMMERCIAL     OPERATIONS AND
                                  SERVICES      HOMEBUILDING       PROPERTY        MANAGEMENT       OTHER        TOTAL
                                ------------    ------------      ----------     --------------   ---------    ---------
<S>                             <C>             <C>               <C>            <C>              <C>           <C>
Revenue...................       $ 17,156         $ 76,115        $  4,901         $  2,669        $ 1,778      $102,619
Costs.....................         14,284           66,286           4,180              682              -        85,432
                                ------------    ------------      ----------     --------------   ---------    ---------
   Gross profit...........       $  2,872         $  9,829        $    721         $  1,987        $ 1,778      $ 17,187
                                ============    ============      ==========     ==============   =========    =========
Depreciation and
   amortization expense...       $      -         $    366        $      -         $    530        $   839      $  1,735

Interest expense..........       $      -         $      -        $      -         $ (1,504)       $   (38)     $ (1,542)
Interest income...........       $     (8)        $     20        $      -         $    820        $     -      $    832

Total assets..............       $ 48,342         $104,924        $      -         $ 48,162        $ 7,645      $209,073
</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 SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1998

    REVENUE. Total revenue was $38.7 million for the three months ended
September 30, 1999, representing a $19.7 million, or 103.4%, increase from
$19.0 million for the three months ended September 30, 1998. The increase was
primarily due to an increase of $22.9 million, or 374.8%, in sales of homes
and an increase of $3.2 million in sales of commercial properties. The 265
single-family home closings for the three months ended September 30, 1999
represented an increase of 373.2%, compared to 56 closings for the three
months ended September 30, 1998. Home closings for the three months ended
September 30, 1999 included 91 in Nevada, 7 in Utah and 167 in Arizona. For
the three months ended September 30, 1998, home closings included 43 in
Nevada and 13 in Utah. The increase in home sales was primarily due to the
Company's acquisition of Diamond Key Homes, Inc. ("Diamond Key") in November
1998 and its increased focus on homebuilding. Sale of commercial properties
was $3.2 million for the three months ended September 30, 1999 compared to $0
for the three months ended September 30, 1998. During the three months ended
September 30, 1999, the Company sold a large warehouse and the operations of
a retail center. There were no sales of commercial properties during the
comparable period of 1998. Construction revenue for the three months ended
September 30, 1999 was $5.0 million, a decrease of $6.8 million, or 57.6%,
from $11.8 million during the three month ended September 30, 1998. The
decrease was primarily due to more construction activity on larger projects
during the three months ended September 30, 1998 compared to the three months
ended September 30, 1999. During the 1998 period, the Company continued
construction on one large residential development and three tax credit
partnership apartment complexes. During the comparable 1999 period, the
Company continued construction of three tax credit partnership apartment
complexes, two of which were near completion, and a senior citizens care
facility. Rental and other revenue increased to $1.4 million for the three
months ended September 30, 1999, a 29.1% increase over the $1.1 million in
the comparable period of the prior year. The increase was primarily due to
additional other revenue recognized by HomeBanc Mortgage Corporation
("HomeBanc") during the three months ended September 30, 1999, primarily for
origination fees and premiums. HomeBanc, an affiliate of Diamond Key, was
acquired by the Company in December 1998.

    COST OF REVENUE. Total cost of revenue was $33.2 million for the three
months ended September 30, 1999, representing a $18.2 million, or 122.0%,
increase from $14.9 million for the three months ended September 30, 1998.
Cost of revenue for the three months ended September 30, 1999 as a percentage
of revenue was 85.8%, compared to 78.5% for the three months ended September
30, 1998. The increase was primarily due to the Company's increase in the
proportion of revenues it generates from its homebuilding activities due to
increased overhead allocation cost on a per unit basis during 1999 and the
write-off of costs relating to certain jobs. The Company wrote off
approximately $698,000 related to development jobs and design-build contracts
that the Company determined would not be completed or collected in the future.

                                       15

<PAGE>

    GROSS PROFIT. Gross profit as a percent of revenue decreased to 14.2% for
the three months ended September 30, 1999 from 21.5% for the comparable
period in 1998. Gross margins on the sales of homes decreased to 12.4% during
the three months ended September 30, 1999 compared to 13.8% during the three
months ended September 30, 1998, due to an increased overhead allocation as
explained above. Gross margin on construction revenue decreased to 10.9% in
the three months ended September 30, 1999, compared to 19.6% in the same
period of 1998, primarily due to the timing of the completion of such
projects, increased overhead allocation and certain write-offs as explained
above. Gross profit margins on commercial properties sold in the three months
ended September 30, 1999 was 1.8% during the three months ended September 30,
1999 and no such sales occurred during the same period of 1998. The low
profit margin on commercial sales is a result of the sale of the operations
of a convenience retail center, a business line that the Company does not
intend to pursue consistent with its overall strategy, and the sale of a
warehouse, both of which had a higher cost basis.

    GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
were $2.6 million for the three months ended September 30, 1999, representing
a $1.4 million, or 123.9%, increase from $1.2 million for the three months
ended September 30, 1998. The increase was primarily due to increased
activities related to the growth in the Company's revenues, including an
increase in homebuilding activities, the acquisition of Diamond Key in November
1998 and the write-off of approximately $341,000 related to the Company's
efforts in a private placement financing that was terminated. Of this
increase, $590,000 of marketing and advertising costs reflect the increased
number of housing subdivisions in production during the three months ended
September 30, 1999 compared to the same period in 1998. The Company had 23
home developments open for sale at September 30, 1999 compared to only 3 at
September 30, 1998. In addition, accounting, legal and agency fees increased
$274,000, vehicle and repairs and maintenance expenses increased $106,000 and
rent, utility, travel and other general office expenses increased $331,000 as
the number of employees increased to 622 at September 30, 1999 from 608 at
September 30, 1998. General and administrative expenses as a percentage of
total revenue was 6.7% for the three months ended September 30, 1999 as
compared to 6.2% for the three months ended September 30, 1998.

    DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense was
$627,000 for the three months ended September 30, 1999, representing a
$196,000, or 45.5%, increase from $431,000 for the three months ended
September 30, 1998. The increase was primarily due to the increase in
goodwill amortization expense of $107,000 related to the acquisitions of
Diamond Key and HomeBanc in the fourth quarter of 1998 and the increase in
amortization expense related to loan fees of $72,000. The remaining increase
was due to depreciation expense related to furniture, fixtures and equipment
due to the Company's growth.

    INTEREST EXPENSE, NET. Interest expense, net, was $131,000 for the three
months ended September 30, 1999, representing a $392,000 or 75.0%, decrease
from $523,000 for the three months ended September 30, 1998. The decrease was
primarily the result of increased interest capitalization on loans related to
construction projects.

    INCOME BEFORE PROVISION FOR INCOME TAXES. As a result of the foregoing
factors, income before provision for income taxes was $2.1 million for the
three months ended September 30, 1999, representing a $184,000, or 9.5%,
increase from $1.9 million for the three months ended September 30, 1998.
Income before provision for income taxes as a percentage of total revenue was
5.5% for the three months ended September 30, 1999 as compared to 10.2% for
the three months ended September 30, 1998.

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1998

    REVENUE. Total revenue was $102.6 million for the nine months ended
September 30, 1999, representing a $49.0 million, or 91.5%, increase from
$53.6 million for the nine months ended September 30, 1998. The increase was
primarily due to an increase of $61.0 million, or 405.1%, in sales of homes
to $76.1 million during the nine months ended September 30, 1999 compared to
$15.1 million during the nine months ended September 30, 1998. The 689
single-family home closings for the nine months ended September 30, 1999
represented a 359.3% increase over the 150 closings for the nine months ended
September 30, 1998. Home closings during the nine months ended September 30,
1999, included 245 in Nevada, 30 in Utah and 414 in Arizona compared to 128
in Nevada and 22 in Utah for the comparable period in 1998. The increase in
home sales was primarily due to the Company's increased focus on homebuilding
and its acquisitions of Diamond Key and Maxim Homes, Inc. ("Maxim") in
November 1998 and March 1998, respectively. Construction revenue decreased
$13.8 million, or 44.5% from $30.9 million during the nine months ended
September 30, 1998 to $17.2 million during the nine months ended September
30, 1999. The decrease is primarily the result of more active projects and
construction activity during the nine months ended September 30, 1998
compared to the nine months ended September 30, 1999. Three large projects
under construction during the nine months ended September 30, 1998 were
completed in early 1999; therefore, lower revenues were recognized on these
projects as they neared

                                       16
<PAGE>

completion during the first part of 1999. Sale of commercial properties was
$4.9 million for the nine months ended September 30, 1999 compared to $3.8
million for the nine months ended September 30, 1998. The increase was due to
four commercial sales during 1999 compared to only two during 1998. The 1999
sales were a retail center, a parcel of land, a warehouse and the operations
of a retail store compared to the 1998 sales which were a warehouse and a
commercial center. Rental and other revenue for the nine months ended
September 30, 1999 was $4.4 million compared to $3.8 million for the nine
months ended September 30, 1998. The increase was due primarily to premiums
and origination fees collected by HomeBanc during the nine months ended
September 30, 1999.

    COST OF REVENUE. Total cost of revenue was $85.4 million for the nine
months ended September 30, 1999, representing a $44.3 million, or 107.5%,
increase from $41.2 million for the nine months ended September 30, 1998.
Cost of revenue for the nine months ended September 30, 1999 as a percentage
of revenue was 83.3%, compared to 76.8% for the nine months ended September
30, 1998. The increase was primarily due to the Company's significant
increase in the proportion of revenues it generates from its homebuilding
activities which has lower margins than construction margins, the increased
overhead allocation to the Company's homebuilding activities on a per unit
basis during 1999 and the write-off of costs relating to certain jobs. During
1999, the Company wrote off approximately $685,000 related to development
jobs and design-build contracts that the Company determined would not be
completed or collected in the future.

    GROSS PROFIT. Gross profit as a percent of revenue decreased to 16.7% for
the nine months ended September 30, 1999 from 23.2% for the comparable period
in 1998. Gross margins on the sales of homes decreased to 12.9% during the
nine months ended September 30, 1999 compared to 15.0% during the nine months
ended September 30, 1998, due to an increased overhead allocation to the
Company's homebuilding activities on a per unit basis. Gross margin on
construction revenue decreased to 16.7% in the nine months ended September
30, 1999, compared to 21.6% in the same period of 1998, primarily due to the
timing of the completion of such projects, increased overhead allocation and
certain write-offs explained previously. Gross profit margin on commercial
properties sold in the nine months ended September 30, 1999 increased to
14.7% from 8.4% in the nine months ended September 30, 1998 primarily due to
the overall lower cost basis of the properties sold during the 1999 period
compared to the properties sold during the 1998 period.

    GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
were $6.5 million for the nine months ended September 30, 1999, representing
a $2.9 million, or 81.3%, increase from $3.6 million for the nine months
ended September 30, 1998. The increase was primarily due to increased
activities related to the growth in the Company's revenues, including an
increase in homebuilding activities and the acquisitions of Diamond Key and
Maxim. Of this increase, $1.6 million of marketing and advertising costs
reflect the increased number of housing subdivisions in production during the
nine months ended September 30, 1999 compared to the same period in 1998. The
Company had 23 home developments open for sale at September 30, 1999 compared
to only 3 at September 30, 1998. In addition, accounting, legal and agency
fees increased $712,000, vehicle and repairs and maintenance expense
increased $285,000 and rent, utility, travel and other general office
expenses increased $726,000 as the number of employees increased to 622 at
September 30, 1999 from 608 at September 30, 1998. General and administrative
expenses as a percentage of total revenue was 6.4% for the nine months ended
September 30, 1999 as compared to 6.7% for the nine months ended September
30, 1998.

    DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense was
$1.7 million for the nine months ended September 30, 1999, representing a
$538,000, or 44.9%, increase from $1.2 million for the nine months ended
September 30, 1998. The increase was primarily due to the increase in
goodwill amortization expense of $371,000 related to the acquisitions of
Diamond Key, Maxim and HomeBanc in 1998 and the increase in amortization
expense related to loan fees of $109,000. The remaining increase was due to
depreciation expense related to furniture, fixtures and equipment purchased
or acquired, due to the Company's growth.

    INTEREST EXPENSE, NET. Interest expense, net, was $710,000 for the nine
months ended September 30, 1999, representing a $637,000 or 47.3%, decrease
from $1.3 million for the nine months ended September 30, 1998. The decrease
was primarily the result of a decrease in interest expense due to increased
interest capitalization on construction projects.

    INCOME BEFORE PROVISION FOR INCOME TAXES. As a result of the foregoing
factors, income before provision for income taxes was $8.2 million for the
nine months ended September 30, 1999, representing a $1.9 million, or 30.9%,
increase from $6.3 million for the nine months ended September 30, 1998.
Income before provision for income taxes as a percentage of total revenue was
8.0% for the nine months ended September 30, 1999 as compared to 11.7% for
the nine months ended September 30, 1998.

                                       17
<PAGE>

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, sales of
properties, and funds available from external sources of debt, including
extention of maturities or obtaining new financing, and equity financing,
together with cash on hand at September 30, 1999, will be sufficient to
provide for its capital requirements for at least the next 12 months. The
Company is currently exploring alternative methods of financing and
negotiating with various lenders as well as in the process of selling certain
properties in order to raise cash. There can be no assurance that the Company
will be able to obtain such financing.

    The Company has two loans maturing during the fourth quarter of 1999; a
$1.0 million loan maturing on December 16, 1999 and a $846,000 loan maturing
on December 19, 1999. The Company intends to pay in full the $1.0 million
loan and renew the $846,000 loan.

    During the fourth quarter of 1998, the Company's President and principal
stockholder, James C. Saxton, pledged 3,471,590 shares of Common Stock, or
approximately 44.9% of the Company's outstanding shares at September 30,
1999, as collateral for two personal loans to Mr. Saxton and three loans to
the Company. Mr. Saxton reloaned the proceeds from the two personal loans to
the Company for use in connection with the acquisition of Diamond Key. The
two notes payable to Mr. Saxton aggregating $7.6 million bear interest at 12%
per annum and mature on February 1, 2000. The outstanding balance at
September 30, 1999 was $6.4 million. 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.

    During the second quarter of 1999, the Company's Executive Vice
President, Michele Pori, pledged 530,000 shares of Common Stock, or 6.9% of
its outstanding shares, as collateral for a $1.2 million personal loan. Ms.
Pori reloaned the proceeds to the Company. The note payable bears interest at
12% per annum and matures on February 3, 2000. At September 30, 1999, the
outstanding balance was $1.2 million.

    The two personal loans Mr. Saxton has outstanding and the personal loan
Ms. Pori has outstanding, aggregating $7.6 million, are currently past their
maturity date of September 3, 1999. Although the principal amounts are past
due, the interest payments are current. The Company is negotiating with the
lender to restructure the loans. There is no guarantee that the Company will
be successful in doing so. The lender, to-date, has not issued a demand for
repayment of any of the loans.

      On February 9, 1998, the Company entered into a $10.0 million revolving
loan agreement with a financial institution. The line of credit provides for
borrowings of up to $1.0 million for general working capital requirements,
$4.0 million for acquisition and development, including strategic
acquisitions, and $5.0 million for land acquisitions. Borrowing under the
line of credit is secured by the pledge of certain Company receivables and
any land acquired with borrowings under the line of credit and bears interest
at one percent over the lender's prime rate in effect from time to time. The
agreement is also subject to certain financial covenants and restrictions.
The revolving working capital line for $1.0 million is payable on November
30, 1999, the maturity date, and the remainder is payable one year and one day
following each advance. These due dates range from December 1, 2000 to
September 14, 2001. As of December 31, 1998 and September 30, 1999, the
Company had outstanding indebtedness of $5.0 million and $8.9 million,
respectively, and available borrowings of $5.0 million and $1.1 million,
respectively, under this agreement. The $1.1 million availability is for land
acquisitions only.

    On July 30, 1997, the Company entered into a $5.0 million revolving line
of credit agreement with a financial institution. Loans under the agreement
bear monthly interest at 1.5% above the prime rate as defined in the
agreement (9.25% at December 31, 1998 and 9.75% at September 30, 1999), and
require the Company to pay a loan fee of 0.25% for each disbursement. Loans
under the agreement are available only for the acquisition of land and are
secured by first trust deeds on certain real property. As of December 31,
1998 and September 30, 1999, the Company had outstanding indebtedness of $1.9
million and available borrowings of $3.1 million 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 $23.9
million for the nine months ended September 30, 1999 compared to $21.4
million for the nine months ended September 30, 1998. The increase in net
cash used in operating activities was primarily due to a $32.1 million
increase in net cash used for properties under development related to
single-family homes during the nine months ended September 30, 1999 compared
to a $19.9 million net increase during the nine months ended September 30,
1998. The number of home developments under construction increased to 27 for
$74.6 million at September 30, 1999 from 10 for $28.9 million at September
30, 1998.

                                       18
<PAGE>

    INVESTING ACTIVITIES. Net cash provided by investing activities was $1.4
million for the nine months ended September 30, 1999 compared to net cash
used of $8.1 million for the nine months ended September 30, 1998. The
decrease in net cash used was primarily due to lower expenditures for
property acquisitions and improvements during the 1999 period compared to the
1998 period as the Company focused more on homebuilding activities during
1999. The Company spent $10.1 million on property acquisitions and
improvements during the 1998 period compared to $2.7 million during 1999. The
decrease in net cash used in investing activities was also attributable to
increased proceeds from the sales of commercial properties from $4.9 million
during the nine months ended September 30, 1999 compared to $984,000 during
the nine months ended September 30, 1998. The Company sold a retail center, a
parcel of land, a warehouse and the operations of a retail store during the
1999 period compared to only a warehouse and a commercial center during the
comparable 1998 period.

    FINANCING ACTIVITIES. Net cash provided by financing activities was $26.7
million for the nine months ended September 30, 1999 compared to $29.9
million for the nine months ended September 30, 1998. The decrease in cash
provided by financing activities was primarily due to lower net borrowings of
$27.0 million during the nine months ended September 30, 1999 compared to
$29.9 million during the nine months ended September 30, 1998.

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

<TABLE>
<CAPTION>

                                                            THREE MONTHS ENDED             NINE MONTHS ENDED
                                                               SEPTEMBER 30,                  SEPTEMBER 30,
                                                          ----------------------       ------------------------
                                                            1998          1999            1998           1999
                                                          --------      --------        --------       --------
       <S>                                                <C>           <C>             <C>            <C>
       Interest incurred:
          Residential................................     $  1,524      $  2,071        $  2,843       $  6,521
          Commercial.................................          674           554           1,813          1,764
                                                          --------      --------        --------       --------
            Total incurred...........................     $  2,198      $  2,625        $  4,656       $  8,285
                                                          ========      ========        ========       ========
       Interest expensed:
          Residential................................     $    146      $     27        $    477       $     58
          Commercial.................................          579           477           1,634          1,503
                                                          --------      --------        --------       --------
            Total expensed...........................     $    725      $    504        $  2,111       $  1,561
                                                          ========      ========        ========       ========
       Interest capitalized at end of period:
          Residential................................     $  1,378      $  2,044        $  2,366       $  6,463
          Commercial.................................           95            77             179            261
                                                          --------      --------        --------       --------
            Total interest capitalized...............     $  1,473      $  2,121        $  2,545       $  6,724
                                                          ========      ========        ========       ========
</TABLE>

    Properties under development and land held for future development or sale
increased by $24.1 million from $80.8 million at December 31, 1998 to $104.9
million at September 30, 1999.

     The Company anticipates that during the next twelve months, portfolio
projects already in development will cost approximately $518,000 in the
aggregate, substantially all of which the Company plans to finance through
construction loans. The Company also anticipates that it will spend
approximately $1.2 million for planned portfolio projects during the next
twelve months. The real estate development business is capital intensive and
requires significant up-front expenditures to acquire and entitle land and
commence development. The Company typically finances, and will continue to
finance, its land acquisition and portfolio development activities utilizing
the proceeds of institutional loans secured by real property. In some cases,
the Company plans to utilize private financing, typically on a short-term or
interim basis. In cases where the Company holds a property after completion
of construction, the Company plans to obtain permanent financing secured by
the property.

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

                                       19
<PAGE>

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

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

BACKLOG

    The Company's homes are generally offered for sale in advance of their
construction. The majority of the Company's homes are sold pursuant to
standard sales contracts entered into prior to commencement of construction.
Such sales contracts are typically subject to certain contingencies such as
the buyer's ability to qualify for financing. Homes covered by such sales
contracts are considered by the Company as backlog. The Company does not
recognize revenue on homes covered by such contracts until the sales are
closed and the risk of ownership has been legally transferred to the buyer.
At September 30, 1999, the Company had 445 homes in backlog, representing an
aggregate sales value of approximately $48.6 million. At September 30, 1998,
the Company's backlog was 41 homes representing an aggregate sales value of
$4.5 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 September 30, 1999, the Company had backlog under
its design-build contracts of approximately $18.0 million. At September 30,
1998, the Company's design-build backlog was approximately $35.8 million.

YEAR 2000

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

     Through September 30, 1999, the Company has completed a majority of its
Y2K resolution efforts on its business critical internal hardware and
software. The Company increased the awareness of the Y2K issue across the
Company, assessed the Company's Y2K issues, determined proposed resolutions,
validated those proposed resolutions and implemented most system solutions.

     Given the information known at this time about the Company's systems and
Y2K issues, coupled with the Company's ongoing, normal course-of-business
efforts to upgrade or replace business critical systems and software
applications as necessary, Y2K costs, the majority of which have been
incurred in fiscal 1999. Current Y2K expenditures have been approximately
$72,000 thus far due to much of the work performed by existing internal
staff. Estimated remaining costs should not exceed $10,000-$20,000. These
costs include incremental personnel costs, consulting costs and costs for the
modification of or replacement of existing hardware and software. These costs
have been and will be funded through cash flows from operations and are
expensed as incurred. Purchased hardware and software has been and will be
capitalized in accordance with the Company's normal accounting policy. The
costs of the project and the timing in which the Company believes it will
complete the necessary Y2K modifications are based on management's best
estimates, which were derived utilizing numerous assumptions of future
events, including the continued availability of certain resources,
third-party modification plans and other factors. However, there can be no
guarantee that these estimates will be achieved and actual results could
differ materially from those anticipated.

     Specific factors that might cause such material differences include, but
are not limited to, the success of the Company in identifying systems and
programs having Y2K issues, the nature and amount of programming required

                                       20
<PAGE>

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 may make provisions that would include the
stockpiling of construction raw materials, automated reports and the
development of back-up systems as an alternative to computers prior to
December 31, 1999.

RISKS AND RELATED FACTORS

    LIQUIDITY. The two personal loans Mr. Saxton has outstanding and the
personal loan Ms. Pori has outstanding, aggregating $7.6 million, are
currently past their maturity date of September 3, 1999. Although the
principal amounts are past due, the interest payments are current. The
Company is negotiating with the lender to restructure the loans. There is no
guarantee that the Company will be successful in doing so. The lender,
to-date, has not issued a demand for repayment of any of the loans. The
Company has two loans maturing during the fourth quarter of 1999; a $1.0
million loan maturing on December 16, 1999 and a $846,000 loan maturing on
December 19, 1999. The Company intends to pay in full the $1.0 million loan
and renew the $846,000 loan. Management believes that cash generated from
operations, sales of properties, and funds available from external sources of
debt, including extention of maturities or obtaining new financing, and
equity financing, together with cash on hand at September 30, 1999, will be
sufficient to provide for its capital requirements for at least the next 12
months. The Company is currently exploring alternative methods of financing
and negotiating with various lenders as well as in the process of selling
certain properties. There can be no assurance that the Company will be able
to obtain such financing.

    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 $77.4 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 9.05%
per annum at September 30, 1999. If the interest rates on the floating rate
debt increase in accordance with changes to the indices upon which the rates
are based, debt service obligations of the Company will increase.

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

                                       21
<PAGE>

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.

                                       22

<PAGE>

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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



                                       23

<PAGE>


PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

    None.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

    None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

    None.

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

    None.

ITEM 5.  OTHER INFORMATION

    None.

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

    Form 8-K, dated November 8, 1999, Item 5. Other Events, Announcement of
termination of former chief financial officer.


                                       24

<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

November 19, 1999                    By:    /s/ James C. Saxton
                                            -----------------------------------
                                            James C. Saxton
                                            President, Chief Executive Officer
                                            and Interim Chief Financial Officer
                                            (Principal Financial Officer)

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


                                       25

<PAGE>



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


                                      26