<PAGE>
 
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-K
               [X] Annual Report Pursuant to Section 13 or 15(d)
             of the Securities Exchange Act of 1934 (Fee Required)

                  For the Fiscal Year Ended September 30, 1996
             [_] Transition Report Pursuant to Section 13 or 15(d)
            of the Securities Exchange Act of 1934 (No Fee Required)

                  For the transition period from _____ to ____

                        Commission File Number 33-89076

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

         Florida                            65-0502494           
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                            5901 N.W. 151st Street
                                   Suite 120
                          Miami Lakes, Florida 33014
                   (Address of principal executive offices)

                                (305) 819-4663
             (Registrant's telephone number, including area code)

       Securities registered pursuant to Section 12(b) of the Act:  None

    Securities registered pursuant to Section 12(g) of the Act:  Class A Common
                             Stock, $.01 Par Value
 
    Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes   X             No _______
                                               -------                   

    Indicate by check mark if disclosure of delinquent files pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.   [X]

    The aggregate market value of voting stock held by non-affiliates of the
registrant as of December 16, 1996 was approximately $3,245,349 based on the
$1.375 closing price for the Class A Common Stock as reported on Nasdaq on such
date and determined by subtracting from the number of shares outstanding on that
date the number of shares held by directors of the registrant.

    As of December 16, 1996, Weitzer Homebuilders Incorporated had 2,360,254
shares of Class A Common Stock, $.01 par value, and 1,500,000 shares of Class B
Common Stock, $.01 par value, outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

Certain exhibits listed in Part IV are incorporated by refernce by certain of
the Company's public filings made pursuant to the Securities Exchange Act of
1934, including the Company's annual report on form 10-K for the year ended
September 30, 1995, the Company's quarterly reports on Form 10-Q for the
quarters ended March 31, 1995, June 30, 1995, December 31, 1995 and March 31,
1996, and the Company's registration statement on Form S-1 filed pursuant to the
Securities Exchange Act of 1933.

================================================================================
<PAGE>
 
                       Weitzer Homebuilders Incorporated

                                   FORM 10-K

                               TABLE OF CONTENTS
  Part I                                                                   Page
                                                                           ----

  Item 1.  Business .....................................................     3

  Item 2.  Properties ...................................................    14

  Item 3.  Legal Proceedings ............................................    14

  Item 4.  Submission of Matters to a Vote of Security-Holders ..........    15

  Part II

  Item 5.  Market for Registrant's Common Equity and Related
           Stockholder Matters ..........................................    16

  Item 6.  Selected Financial Data ......................................    18

  Item 7.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations ..........................    21

  Item 8.  Financial Statements and Supplementary Data ..................    30

  Item 9.  Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure ..........................    51

  Part III

  Item 10.  Directors and Executive Officers of the Registrant ..........    51

  Item 11.  Executive Compensation ......................................    51

  Item 12.  Security Ownership of Certain Beneficial Owners
            and Management ..............................................    54

  Item 13.  Certain Relationships and Related Transactions ..............    54

  Part IV

  Item 14.  Exhibits, Financial Statement Schedules and
            Reports on Form 8-K .........................................    55

  Signatures ............................................................    57


                                       2
<PAGE>
 
  PART I

  ITEM 1.  BUSINESS

  General

       Weitzer Homebuilders Incorporated (the "Company"), organized in Florida
  in 1994, is engaged, through its subsidiaries, primarily in the design,
  construction and sale of  single-family homes and townhomes in Dade and
  Broward Counties located in  Southeast Florida.  Prior to May 1995, the
  Company conducted substantially all of its homebuilding operations through
  general partnerships (the "Weitzer Homebuilding Partnerships"), in which one
  general partner was a subsidiary of the Company and the other general partner
  was a subsidiary of an unaffiliated third party (the "Financial Partner").
  Each general partnership was involved in the development of one specific
  homebuilding project.  In May 1995, with a portion of the net proceeds of the
  Company's initial public offering, the Company acquired the capital stock of
  the existing Financial Partner affiliates (the "Partnership Acquisition").
  Since that time, the Company consolidates the operations of the Weitzer
  Homebuilding Partnerships with the financial statements of the Company.
  Unless the context requires otherwise, all references to the Company shall
  include its subsidiaries and the Weitzer Homebuilding Partnerships.

       The Company offers a wide variety of moderately-priced homes that are
  designed to appeal to the entry level and first time move-up buyers.  The
  Company has delivered  approximately 1,462 homes in the past five fiscal
  years, including 309 in the fiscal year ended September 30, 1996.  Sales
  prices of the Company's homes range from approximately $85,000 to $185,000 and
  the average sales price of homes delivered during the fiscal year ended
  September 30, 1996 was approximately $121,000. At present the Company has
  eight communities in various stages  of planning and development, including
  six communities in which the Company is  currently offering homes for sale.
  At September 30, 1996, the Company had 583 available lots for sale and 943
  available lots under option or contract compared to 1,006 available lots for
  sale and 1,125 available lots under option or contract at September 30, 1995.
  There is no assurance that all lots available for  home construction will in
  fact be used for construction of homes since  construction and sales of homes
  are subject to a variety of factors, including, without limitation, general
  and local economic conditions, availability of financing, interest rates and
  government regulation.

       The Company's principal executive offices are located at 5901 N.W. 151st
  Street, Suite 120, Miami Lakes, Florida  33014, (305) 819-4663.

  Operating Strategy

       The operating strategy of the Company currently emphasizes the following
  elements:

    -Affordable Housing And Value Pricing. The Company offers a wide variety of
  moderately-priced homes that are designed to appeal to the entry-level and
  first time move-up buyers. The Company strives to price its homes
  competitively, while providing perceived


                                       3
<PAGE>
 
  innovative designs, including architectural details and amenities in several
  of its projects typically found in more expensive homes, such as cathedral
  ceilings, recessed lighting, glass block, security and intercom systems. The
  Company's models afford prospective home buyers a variety of options and
  features so that they may customize their designs to suit their needs.

       -Commitment to Quality And Customer Service.  The  Company acts as the
  general contractor for its projects and requires that its subcontractors and
  suppliers use quality, durable materials in the construction of its homes.
  The Company generally provides home buyers with at least a one-year warranty
  on workmanship and building materials and, in certain instances such as when
  financing is provided through a government loan or where city codes require, a
  ten-year structural warranty.

       -Cost Controls.  In general, the Company attempts to reduce certain risks
  in the homebuilding industry and maximize its financial resources by:  (i)
  acquiring land for development through seller financing (which generally
  allows for more favorable payment terms and lower closing costs); (ii)
  utilizing options and other similar agreements whereby the Company provides a
  relatively small deposit to obtain the right to purchase a specified number of
  lots over some period of time so long as it exercises a certain number of
  options pursuant  to a periodic takedown schedule; (iii) obtaining required
  zoning entitlements prior to purchasing land; (iv) beginning construction of a
  home only after execution of a sales contract, receipt of a down payment and,
  where applicable, the buyer's receipt of mortgage approval; (v) using
  subcontractors on a fixed price basis; (vi) minimizing inventory of land and
  unsold homes by building speculative units on a limited basis; and (vii)
  obtaining volume discounts on construction materials.

       -Southeast Florida Market.  Although the Company is continuously
  evaluating locations for new residential communities and is exploring the
  possibility of expanding into areas outside of its primary market in Southeast
  Florida, the Company anticipates that in the near term its  business and
  earnings will continue to be derived principally from the Southeast  Florida
  market. Based on the Company's knowledge of the Southeast Florida
  homebuilding market, the Company believes it has certain competitive
  advantages  in such market, including understanding of, and experience with
  the local market; controls and cost savings that result from the Company's
  centralized operations; and an experienced sales force that is generally
  employed on a long-term rather than project-by-project basis.

  Land Acquisition And Development

       The Company acquires both improved building lots ready for construction,
  and tracts of land that require site improvements prior to construction.
  Generally, the Company attempts to acquire or control at least 100 lots in a
  development to achieve economies of scale in its marketing activities.  When
  contemplating the purchase of land for development, the Company considers the
  cost of the land, the desirability of the proposed project to targeted home
  buyers, population growth patterns, competitive conditions and available
  financing.  The Company's land purchase agreements are typically subject to
  numerous conditions, including, but not limited to, the Company's ability to
  obtain or verify the necessary zoning and other governmental approvals for the
  proposed subdivision.  During the investigation period, the Company also
  confirms the availability of 


                                     4    
<PAGE>
 
utilities, conducts hazardous waste and other environmental analyses, arranges
construction financing and completes its marketing feasibility studies. As a
result, the Company is generally able to begin development activities
immediately after closing the land purchase.

     The Company attempts to reduce the financial risks and capital requirements
associated with maintaining its own inventory of lots by utilizing options and
other similar agreements pursuant to which the Company provides a deposit and
obtains the right to purchase a specified number of lots over a period of time
so long as it exercises a certain number of its options pursuant to a periodic
takedown schedule. These agreements are generally on a nonrecourse basis, so
that if the Company does not meet the takedown schedule, its only financial risk
is forfeiture of a deposit. Generally, the options are exercised only after
prospective home buyers have executed a sales contract and made a down payment;
however, the options may be exercised without having pre-sold the lots in order
for the Company to preserve its option to purchase the remaining lots.

     The following table sets forth information on the current land options of
the Company (which the Company currently plans to excercise on or prior to the
expiration date, and excludes projects planned for future development as
described below):


<TABLE>
<CAPTION>
                               Options for Land Held by the Company                    
                             ----------------------------------------             Cash      
                             Lots Under    Expiration      Purchase            Commitment to 
Community                      Option         Date           Price            Close (Approx.)
---------                    ----------------------------------------         --------------- 
<S>                          <C>          <C>              <C>                <C>
Serena Lakes Townhomes ....     284       Jan. 31, 1997    $954,000                 None
</TABLE>

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


     The Company devotes time and effort in developing a design and marketing
concept for each of its subdivisions, which includes a determination of size,
style and price range of the homes, layout of streets, layout of individual lots
and overall community design. The product line offered in a particular
subdivision depends upon many factors, including the housing generally available
in the area, the needs of the particular market and the Company's cost of lots
in the subdivision. The Company then undertakes development activities that
include site planning, engineering and construction of roads, sewer, water and
drainage facilities.


                                       5
<PAGE>
 
Summary of Residential Projects

     The following information concerning the projects currently being developed
and projects planned for future development as of September 30, 1996:

<TABLE>
<CAPTION>
        Projects Currently Being Developed
                                                                                                  Range of Base
                                                          Number     Homes       Lot       Year    Home Prices
Name                          Location                   of Homes  Delivered  Inventory   Opened      (000s)
----                          --------                   --------  ---------  ----------  ------  --------------
<S>                           <C>                        <C>       <C>        <C>         <C>     <C>
Weitzer at Chapel Trail       Pembroke Pines (Broward)        162        160          2     1993     $160 - 210
Weitzer at Serena Lakes II    Southwest Dade                  376        257        119     1993     $ 87 - 107
Serena Lakes Townhomes        Southwest Dade                  548        149     399 (1)    1994     $ 72 -  85
Weitzer at Harmony Lakes      Southwest Broward               407         89        318     1995     $100 - 170
Weitzer at Deerfield Beach    Deerfield (Broward)             151          8        143     1995     $120 - 140
Tesoro at Forest Lakes        Southwest Dade                  251          -        251     1996     $100 - 119
</TABLE>
---------------------------
(1) Includes lots owned and lots which the Company holds options to purchase -
    284 lots at Serena Lakes Townhomes, as described above.


     Projects Planned For Future Development
<TABLE>
<CAPTION>
                                                                                         Range of Base  
                                                               Number     Expected To     Home Prices   
Name                              Location                    of Homes     Be Opened        (000s)      
----                              --------                    --------    -----------    -------------  
<S>                               <C>                         <C>         <C>            <C>            
Malibu Bay at Chapel Trail        Pembroke Pines (Broward)      500         3/1997          $ 85-110    
Fiesta at Serena Lakes Estate     Southwest Dade                 70         4/1997          $110-130     
</TABLE>

     The projects planned for future development represents land as to which
the Company has not yet aquired title.The future development of such land
depends upon numerous factors, including the financial condition of the
Company and the homebuilding  industry, general and local economic conditions,
availability of financing, interest rates, housing demand, availability of
qualified labor and materials, sufficiency of infrastructure and government
regulation.  There is no assurance that any of the land under option or
contract will be  acquired by the Company or that any of the planned projects
will be completed  and, if completed, there is no assurance that the
information relating to the  number and types of homes, prices or community
features will not change  materially.

     Descriptions of the Company's current projects follow:

     Weitzer at Chapel Trail.  Weitzer at Chapel Trail is a single-family home
community in Pembroke Pines, in Broward County, Florida, consisting 162 homes
on approximately 34 acres. Four models were completed in April 1993 and were
offered at base prices ranging from approximately $160,000 to $210,000.  One
and two story homes of 2,000 to 3,250 square feet offer the first-time  move-
up buyer a quality four or five bedroom home at affordable prices.



                                       6
<PAGE>
 
       Weitzer at Serena Lakes II.  Located in southwest Dade County, Florida,
  Weitzer at Serena Lakes II opened in December 1993 and includes 376  single-
  family homes. The homes contain from 1,141 to 1,787 square feet and are
  currently being offered at base  prices ranging from $87,000 to $107,000.
  Weitzer at Serena Lakes II is the  second phase of a three phase community of
  70 acres, which includes 76  single-family homes in Weitzer at Serena Lakes
  which were sold during the first  phase and also includes Serena Lakes
  Townhomes, which is discussed below.

       Serena Lakes Townhomes.  Serena Lakes Townhomes is the final phase of
  Serena Lakes, a community located in southwest Dade County, Florida. The
  townhome community will contain 548 Townhomes surrounding a central lake and
  will include three community pools, each with a cabana center. The Company has
  acquired the land for 264 units and holds options for the land for the
  additional 284 units. The townhomes are expected to contain from 1,209 to
  1,325  square feet, and the current anticipated base sales prices will range
  from approximately  $72,000 to $85,000. The options for the additional 284
  units provide for one  takedown which will require the payment of $954,000 in
  January 1997.

       Weitzer at Harmony Lakes.  Located in the City of Davie, in Broward
  County,  Florida, this community is planned for 236 single-family homes which
  will be  targeted to first-time move-up buyers and 171 townhomes which will be
  targeted  to entry level buyers. The homes are currently offered at base
  prices  ranging from approximately $140,000 to $170,000. The townhomes are
  currently offered at base prices ranging from approximately $100,000 to
  $110,000. The  community contains a recreation facility complete with
  community pool.

       Weitzer at Deerfield Beach.  Located in Deerfield, in Broward County,
  Florida, Weitzer at Deerfield Beach is planned for 151 single-family homes.
  This lakeside community will target both the entry level buyer and the first-
  time move-up buyer, and homes are currently expected to be  offered at base
  prices ranging from approximately $120,000 to $140,000.

       Tesoro at Forest Lakes. The Company has executed a purchase and sale
  agreement to acquire 251 developed lots in West Kendall, Dade County Florida.
  This townhome/villa community is located in the master planned community of
  Forest Lakes. Tesoro at Forest Lakes, will target the entry level home buyer,
  and homes are currently expected to be offered at base prices ranging from
  $100,000 to $119,000. The developed lots will be purchased in three phases.
  The first phase of 92 homesites was purchased in February 1996. The second
  phase of 71 homesites was purchased in November 1996. The final phase of 88
  homesites is anticipated to close in May 1997.

       Descriptions of the Company's projects planned for future development
  follow:

       Malibu Bay at Chapel Trail.  The Company has executed a purchase and sale
  agreement to acquire approximately 500 townhome sites in the master planned
  community of Chapel Trail, where the Company is currently completing the last
  group of homes in its Weitzer at Chapel Trail project. The Malibu Bay
  community will target the entry level home buyer. The market price of the
  townhomes currently expected to range from $85,000 to $110,000. The
  development is divided into two phases. Phase I consists of 250 lots which are
  currently expected to be purchased as follows: (i) 75 lots on or before April
  1997; and (ii) 25 lots each quarter beginning six months after the first
  closing. Phase II consists of 250 lots which are currently expected to be
  purchased as follows: (i) 75 lots on or before October 1998; and (ii) 25 lots
  each quarter thereafter.



                                       7
<PAGE>
 
       Fiesta at Serena Lakes Estates. The Company has purchased approximately
  16 acres of land adjacent to the current Serena Lakes II project and is
  currently expected to build approximately 70 single family homes. The homes
  will contain 1,400 to 2,000 square feet and will be offered at $110,000 to
  $130,000. Sales are currently expected to commence in April 1997.


  Construction

       The Company, directly or indirectly through an affiliate, acts as the
  general contractor for the construction of its residential developments. The
  general contractor's functions include monitoring the  construction of each
  project (including monitoring compliance with zoning and  building codes),
  participating in all significant design and building decisions,  coordinating
  the activities of subcontractors and suppliers and controlling the  quality
  and cost of the work. Subcontractors and material suppliers typically  are
  retained after competitive bidding at a fixed price for a specific project,
  and the Company does not have any long-term contracts with any of its
  subcontractors. The Company generally requires that its subcontractors agree
  to  its standard terms regarding matters such as frequency of payments and
  maintenance of insurance. The Company generally utilizes more than one
  subcontractor for each type of work to minimize increased costs and delays
  that  might result if one of its subcontractors experiences financial or other
  difficulties.

       The Company installed a fully integrated sales, construction and
  accounting software package which utilizes the critical path method as the
  basis of the system. The critical path method details the integral steps
  necessary for the complete construction of a home and sets forth specific
  milestones and the timing necessary to achieve the milestones so that the
  Company can track the progress of the construction on each of its homes. All
  data is updated on a daily basis resulting in current information by project
  and by individual unit to increase the likelihood of, among other things,
  timely  completion of homes under construction.

       The Company does not maintain significant inventories of construction
  materials except for materials for homes under construction and a limited
  amount of other materials. Generally, the construction materials used in the
  Company's operations are readily available from numerous sources, but prices
  can fluctuate due to various factors, including increased demand or supply
  shortages. Whenever possible, the Company negotiates agreements for price and
  volume discounts with national, regional or local suppliers of materials,
  which either the Company or its subcontractors will purchase. The Company
  does not have any long-term contractual commitments with suppliers of
  building materials. Homebuilders from time to time experience industry-wide
  shortages of certain raw materials, and prices of materials can fluctuate. In
  addition, stringent building codes which were adopted in Dade County and
  Broward County have increased costs of homes. The Company has generally been
  able to pass along cost increases to the prospective buyers, but there is no
  assurance that increased costs will not have a material adverse effect on the
  Company's operations.



                                       8
<PAGE>
 
  Marketing and Sales

       The Company sells substantially all of its homes through employees who
  work from sales offices located at the model homes in each  project. The
  Company also sells its homes through independent real estate  brokers. Sales
  personnel assist prospective home buyers by providing them with floor plans,
  information on prices, options and custom features and tours of model homes.
  Sales personnel are trained by the Company and are periodically updated on
  the availability of financing, construction schedules, marketing and
  advertising plans. Most of the sales personnel are employed on a long-term
  rather than on a project-by-project basis, which the Company believes results
  in reduced training costs and a more motivated and experienced sales force.

       Each model complex consists of three to five models. Each model is fully
  merchandised to accentuate the design and size of the home. The merchandising
  is based upon the demographics and lifestyles of the target buyer. Amenities
  in many of the Company's current homes include ceramic tiles, oversized
  kitchens and a separate shower and roman tub in master baths, Spanish tile
  roofs, brick paved driveways and walkways, security systems, and an upgraded
  designer full appliance package. Each project's sales center contains graphic
  displays of the floor plans and a community site plan, as well as information
  on the history of the Company.

       The Company's advertising program encompasses various media. Signage is a
  primary medium which is implemented when land is acquired. Upon the completion
  of the models, a full advertising campaign typically begins using newspaper,
  radio and direct mail. In addition, the Company provides incentives to
  independent real estate brokers as a means of ensuring broker participation.

       The volume and timing of the Company's home sales are substantially
  affected by the opening of new residential developments. Generally, a
  residential development will generate a high sales volume in the early period
  of  its existence (due primarily to the wide choice of available lots), with
  sales activity decreasing as the project matures. In addition, the Company's
  ability to sell its homes is dependent, in large part, upon the ability of
  its buyers to obtain mortgage financing. The Company does not finance the
  purchase of homes in its communities but rather refers customers to a variety
  of mortgage lenders for their financing needs. The Company has experienced
  significant variability in sales on a quarterly basis as a result of, among
  other things, the timing of home closings, the cyclical nature of the
  homebuilding industry, changes in prevailing interest rates and other
  economic factors and changes in the costs of materials and labor.

       The Company's home closings are also dependent on the availability of
  homeowner's insurance.  Primarily as a result of Hurricane Andrew, there is a
  widespread shortage of available private insurance for homeowners in the State
  of Florida.  The State of Florida has created a joint underwriting association
  to provide insurance coverages to homeowners who cannot obtain private
  insurance; however, such State provided insurance affords homeowners less
  protection than is typically provided by private insurance carriers at greater
  costs and may not be purchased during periods in which there is a tropical
  storm which could threaten the State. Due to the frequency of tropical storms
  during the summer months of 1996, buyers of the Company's homes were unable to
  secure homeowners insurance on a timely basis and several home closings were
  delayed. See "Management's Discussion and Analysis of Financial Condition and
  Results of Operations".



                                       9
<PAGE>
 
       Through its relationships with mortgage companies, the Company monitors
  the availability of governmental programs offering low interest mortgage
  financing to prospective home buyers as a means to market and increase the
  Company's demand for its homes. When programs become  available, the Company
  reviews the terms of the program and the requisite  commitment fee to
  determine whether it will submit a bid for the Company to obtain low interest
  financing for qualified homebuyers.

  Customer Service and Quality Control

       The Company's customer service personnel are responsible for pre-closing,
  quality control home inspections with the buyer and responding to post-closing
  customer needs. The active participation of customer service personnel, in
  management's opinion, reduces post-closing repair costs, fosters the Company's
  reputation for quality and service and leads to repeat and referral business.
  The Company provides home buyers with a limited warranty program which, in
  general, provides home buyers with at least a one-year warranty on workmanship
  and building materials through the Home Buyers Warranty program, a privately
  insured program that establishes standards for the acceptable condition of a
  home and resolution of disputes. Historically, the Company has not incurred
  any material costs relating to  warranty claims or defects in construction.

  Government Regulation and Environmental Matters

       In developing a project, the Company must obtain the approval of numerous
  governmental authorities regulating such matters as permitted land uses and
  levels of density, the installation of utility services such as water and
  waste  disposal and the dedication of acreage for open space, parks, schools
  and other  community purposes. Several authorities in Florida have imposed
  impact fees as a  means of defraying the cost of providing certain
  governmental services to  developing areas, and the amount of these fees has
  increased significantly  during recent years. Other Florida and local laws
  require the use of specific  construction materials which reduce the need for
  energy-consuming heating and  cooling systems or are expected to withstand
  certain wind speeds. Dade County  and Broward County have enacted more
  stringent building codes as a  result of Hurricane Andrew which have resulted
  in increased costs of  construction. The State of Florida and counties and
  cities within the State have  also, at times, declared moratoriums on the
  issuance of building permits and  imposed other restrictions in areas where
  the infrastructure (e.g., roads,  schools, parks, water and sewage treatment
  facilities and other public  facilities) does not reach minimum standards, all
  of which could have a material  adverse effect on the Company's business. To
  date, the governmental approval  processes and the restrictive zoning,
  moratoriums and allocation systems have not had a material adverse effect on
  the Company's  development activities.

       The Company is subject to a variety of federal, state and local statutes,
  ordinances, rules and regulations concerning protection of health and the
  environment. The particular environmental laws which apply to any given
  community vary greatly according to the community site, the site's
  environmental  conditions and the present and former uses of the site. These
  environmental laws  may result in delays, cause the Company to incur
  substantial compliance and  other costs and prohibit or severely restrict
  development in certain  environmentally sensitive regions or areas. Prior to
  consummating the purchase  of land, the Company engages independent
  environmental engineers to evaluate  such land for the presence of hazardous
  or toxic materials, wastes or  



                                      10
<PAGE>
 
  substances. The Company has not been materially adversely affected to date by
  the presence or potential presence of such materials.

       To varying degrees, certain permits and approvals may be required to
  complete the residential developments currently being planned by the Company,
  including land development permits (water, sewer, paving and drainage), sales
  center permits, model home permits and building permits. The process of
  obtaining permits and approvals is an ongoing process in the ordinary course
  of  business that the Company is engaged in as it develops and constructs
  homes for  its current and future planned projects. The ability of the Company
  to obtain  necessary approvals and permits for these projects is often beyond
  the Company's  control, and could restrict or prevent the development of
  otherwise desirable  property. The length of time necessary to obtain permits
  and approvals increases  the carrying costs of unimproved property acquired
  for the purpose of  development and construction. In addition, the continued
  effectiveness of  permits already granted is subject to factors such as
  changes in policies, rules and regulations  and their interpretation and
  application. To minimize these risks, the Company generally restricts land
  purchases to tracts that have or will have zoning and all other  related
  entitlements. To date, the Company has not encountered any material
  difficulties in obtaining permits and does not currently anticipate any
  material  difficulties in obtaining permits in the future.

  Competition

       The homebuilding industry is highly competitive and fragmented. The
  Company  competes on the basis of a number of interrelated factors, including
  location,  reputation, amenities, design, quality and price, with numerous
  large and small  builders, including some builders with nationwide operations
  and greater  financial, marketing, sales and other resources.  At times
  competitors may offer homes at  discounted prices for financial reasons. The
  Company also competes for  residential sales with individual resales of
  existing homes and condominiums,  including sales of homes at deeply
  discounted prices by lenders, the Resolution  Trust Corporation and other
  similar institutions. Based on its knowledge and  analysis of the homebuilding
  market and its knowledge of its competitors,  management believes that the
  Company's primary competitive strengths have been  (i) its ability to offer
  quality residences at affordable prices; (ii) the  location of its
  communities; and (iii) its reputation for service, innovative  design and
  value pricing.

       The Company also competes with other homebuilders for the acquisition of
  lots. Competition for available lots varies from market to market depending on
  supply and is based primarily on price, reputation and ability to build,
  market  and sell homes. In this regard, management believes that the Company's
  history  of meeting lot takedown schedules and making timely payments has
  enhanced its  competitive position with local area land developers.



                                      11
<PAGE>
 
  Warranties, Bonds and Other Obligations

       The Company is often required, in connection with the development of its
  projects, to obtain performance or maintenance bonds or letters of credit. The
  amount of such obligations outstanding at any time varies in accordance with
  the  Company's pending construction activities. In the event any such
  obligations are  drawn upon because of the Company's failure to build required
  infrastructure,  the Company would be obligated to reimburse the issuing
  surety company or bank.  In connection with its development of the land at the
  Weitzer at Harmony Lakes  project, the Company was required to obtain
  approximately $1.3 million of  performance bonds. Including these performance
  bonds, at September 30, 1996, the Company had approximately $1.6 million in
  letters of credit and performance bonds  outstanding in connection with its
  development and construction activities.

       The Company generally provides home buyers with at least a one-year
  warranty on workmanship and building materials and, in certain instances such
  as  when financing is provided through a government loan or where city codes
  require, a ten-year structural warranty. The cost of providing extended
  warranties and warranty services was not material during the fiscal year ended
  September 30, 1996. The subcontractors who perform most of the actual
  construction in turn provide  warranties of workmanship to the Company
  typically of one year in duration  following completion of their work and
  perform substantially all of the warranty  work at no cost to the Company. The
  Company has not sustained any material  claims for warranty services under its
  ten-year structural warranty program.

       The Company also has obligations to subsidize homeowners' associations in
  certain of its residential developments up to a pro rata portion of expenses
  based on the number of lots which have not been closed in such developments.
  To date, the Company has not incurred any costs to  subsidize homeowners'
  associations, as such associations' revenues have been  adequate to cover
  their operating costs.


  Employees; Leasing Arrangement

       At September 30, 1996, the Company leased the services of approximately
  54 persons, of whom approximately 19 were sales and marketing personnel, 13
  were  executive, administrative and clerical personnel and 22 were involved in
  construction. All of the personnel of the Company are employees of National
  Business Solutions, Inc. ("NBS"), which has had an agreement for services with
  Weitzer Services, Inc., a subsidiary of the Company.  NBS is a vehicle for
  small  businesses to obtain workers' compensation and health care coverage at
  a  discounted large group rate. NBS is the employer of record and assumes all
  payroll obligations and certain employee benefits administration (such as
  payroll preparation, payment and reporting of payroll taxes, maintaining
  employee health insurance and related benefits and workers' compensation
  reporting) with respect to the personnel of the Company, while allowing the
  Company to retain management control of these persons, including supervision,
  job description and salary determinations. The Company determines changes in
  staffing levels and makes recommendations to NBS with respect to the hiring
  and firing of personnel. Although NBS has the right to do so, NBS has never
  failed to accept the recommendation of the Company with respect to hiring  and
  firing of personnel. The Company prepays NBS for any payroll taxes,  workers'
  compensation and health insurance and 



                                      12
<PAGE>
 
  receives a report each quarter from NBS's certified public accountants as to
  whether such payroll taxes were filed and paid in a timely manner. Should NBS
  fail to pay payroll taxes, workers' compensation or health insurance, the
  Company may be liable for such obligations. Weitzer guarantees the obligations
  of Weitzer Services, Inc. under the agreement with NBS. References to
  'employees' of the Company will include individuals whose services are leased
  from NBS. The Company believes that its relations with its personnel and
  subcontractors are satisfactory.

  Directors and Executive Officers of the Registrant

       The following table sets forth information,  with respect to each person
  who is currently an executive officer or director of the Company, as indicated
  below.
<TABLE>
<CAPTION>
 
NAME                          AGE                         POSITION
<S>                           <C>          <C>
--------------------------------------------------------------------------------
  Harry Weitzer                55          Chairman of the Board, President
                                            and Chief Executive Officer
  Leigh Feldsteen              42          President - South Florida Division
  Estelle Burnside             53          Executive Vice President
  James Rosewater              31          Vice President--Sales
  Ivan Faggen                  57          Director and Vice-Chairman of the Board
  Joseph B. Rose               63          Director
  Lawrence Hellring            50          Director
  Michael Ambrosio             50          Director
</TABLE>

       Harry Weitzer has served as Chairman of the Board and Chief Executive
  Officer of the Company since its formation in June 1994 and as President since
  December 1994. Mr. Weitzer has also served as President and Chief Executive
  Officer of each of the Company's subsidiaries since their respective inception
  more than five years ago. Mr. Weitzer has over 27 years of experience in the
  homebuilding industry, being actively engaged as a homebuilder in Michigan
  (from 1968 to 1976) as well as in Southeast Florida (since 1976). Mr. Weitzer
  is a current  member of the National Association of Home Builders, the
  Builders Association of  South Florida and the University of Miami Citizens
  Advisory Board.

       Leigh Feldsteen has served as President - South Florida Division and
  director of sales of the Company since August 1996. From March 1995 to August
  1996 Mr. Feldsteen served the sales and marketing manager and national
  director of sales training for Morrison Homes, Inc,. From January 1993 to
  January 1995 Mr. Feldsteen served as national corporate sales trainer for The
  Ryland Group, Inc.. From January 1991 to January 1993 Mr. Feldsteen served as
  a sales representative for M/I Schottenstein.
 
       Estelle Burnside has served as Executive Vice President of the Company
  since October 1995. Ms. Burnside has served in numerous management  and
  administrative positions with the Company and subsidiaries of the Company and
  other Weitzer  affiliates, including serving as Vice President of each of the
  Weitzer  Subsidiaries since their respective inception more than five years
  ago.
 
       James Rosewater has served as Vice President--Marketing since May 1995.
  From December 1993 to April 1995, Mr. Rosewater served as Director of
  Marketing for Johnson Group Management, Inc./Dry Clean USA, Inc. From December
  1989 to December 1993, Mr. Rosewater served as Director of Marketing for Dry
  Clean USA, Inc. Mr. Rosewater is Mr. Weitzer's son-in-law.


                                      13
<PAGE>
 
       Ivan Faggen has served as a Director and Vice Chairman of the Board of
  Directors of the Company since December 1996. Mr. Faggen is currently the
  managing partner at Triton Pacific Partners, LLC, a company involved in
  investment banking. From 1995 to 1996 Mr. Faggen was the managing director of
  Tishman Speyer Properties and was responsible for raising capital and
  acquiring land for an office building development. From 1962 to 1995 Mr.
  Faggen was a partner with Arthur Andersen & Co. LLC and served as world wide
  director of such firm's real estate service group.

       Joseph B. Rose has served as a Director of the Company since May 1995.
  Mr. Rose has been the sole proprietor of Joseph B. Rose  Construction Company
  since 1957 and the sole proprietor of M.R. Management  Company since 1967.
  These companies are engaged in the development and  management of commercial
  and multiple occupancy properties in the Detroit,  Michigan metropolitan area.

       Lawrence Hellring has served as a Director of the Company since March
  1996. Mr. Hellring is president and owner of Superior Windows, Corp.. Mr.
  Hellring has been associated with Superior Windows, Corp., a privately held
  manufacturing company for the past eleven years.

       Michael Ambrosio has served as a Director of the Company since May 1996.
  Mr. Ambrosio is vice president of Simpkins Industries, Inc. and executive vice
  president of Westfield Financial Corp., the real estate investment division of
  Simpkins Industries, Inc.. Mr. Ambrosio has been associated with Simpkins
  Industries, Inc. for the past five years.
 
  ITEM 2.   PROPERTIES

       The Company's principal business offices are in Miami Lakes in Dade
  County,  Florida and consist of 9,000 square feet which are being leased
  through 1999.  The Company currently uses 8,000 square feet for its own
  purposes and  has subleased approximately 1,000 square feet to a third party.
  Management believes that its  existing facility will be adequate for its
  purposes for the foreseeable future.

  ITEM 3.  LEGAL PROCEEDINGS

       The Company has been involved from time to time in litigation arising in
  the ordinary course of business, none of which has had a material adverse
  effect on the financial position or results of operations of the Company.

       Effective as of December 5, 1996, a lawsuit captioned, U.C. Financial
                                                              --------------
  Ltd. and Universal Finance Holding AG v. Weitzer Homebuilders Incorporated
  --------------------------------------------------------------------------
  (No. 96 Civ 6737 (SHS)), was settled by the parties thereto. The litigation
  concerned the convertibility of an aggregate $600,000 pricipal amount of
  debentures into shares of the Company Class A Common Stock. In accordance with
  the terms of the settlement, the debentures were redeemed by the Company for
  an aggregate $690,000, inclusive of accured interest. In addition, the Company
  redeemed a debenture in the principal amount of $300,000 for $320,000,
  inclusive of accrued interest in connection with such redemptions.



                                      14
<PAGE>
 
  ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

       No matters were submitted to a vote of security holders during the fourth
  quarter of the fiscal year ended September 30, 1996. 



                                      15
<PAGE>
 
  PART II

  ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

  Market information

       The Company's Class A Common Stock has been traded since April 26, 1995
  on Nasdaq under the symbol "WTZRA". Prior to that time, there was no public
  market for the Class A Common Stock. There is no established public trading
  market for the Company's Class B Common Stock. The following sets forth the
  range of high and low bid prices for the Class A Common Stock as reported on
  Nasdaq during each of the quarters presented. The quotations set forth below
  are inter-dealer quotations, without retail mark-ups, mark-downs or
  commissions and do not necessarily represent actual transactions.
<TABLE>
<CAPTION>
 
 
                     Class A Common Stock
                     --------------------
                                            
    Quarterly Period Ended          High Bid          Low Bid
    ----------------------          --------          --------
<S>                                <C>               <C>
                                            
    September 30, 1996               $2 5/8           $1 3/4
    June 30, 1996                    $3 3/4           $1 3/4
    March 31, 1996                   $5               $3 1/8
    December 31, 1995                $6 1/2           $3 3/4
    September 30, 1995               $7 1/8           $5 3/4
    June 30, 1995 commencing                           
    April 26, 1995                   $7 1/8           $6 15/32
 
</TABLE>

       As of December 23, 1996, there were approximately 90 holders of record of
  the Company's Class A Common Stock. This number does not include approximately
  950 beneficial owners of the Common Stock whose shares are held in the names
  of various dealers, clearing agencies, banks, brokers and other fiduciaries.

  Dividends

       Prior to the Earnings Achievement Date (as hereinafter defined), the
  holders of the Common Stock are entitled to receive, if, when and as declared
  by the Board of Directors of the Company to the extent funds are legally
  available therefor, dividends at the rate of (i) $.325 per share per annum,
  with respect to the Class A Common Stock, and (ii) $.001 per share per annum,
  with respect to the Class B Common Stock, payable quarterly on the fifteenth
  day of February, May, August and November of each year. For periods following
  the Earnings Achievement Date, holders of the Class A Common Stock and the
  Class B Common Stock are entitled to receive such dividends, in equal amounts
  per share, as may be declared from time to time by the Board of Directors out
  of funds legally available therefor.

       The "Earnings Achievement Date" is a date which is 10 business days
  following the filing by the Company with the Securities and Exchange
  Commission of the first Form 10-Q or Form 10-K, as the case may be (the "SEC
  Report"), which reflects that, as of the last day of the period to which such
  SEC Report relates, the Company has had an aggregate of $7,500,000 of
  Operating Income earned since April 1, 1995 (the "Earnings Achievement").
  "Operating Income" of the Company for any fiscal period means the Consolidated
  Net Income for such period, (x) increased 



                                      16
<PAGE>
 
  or decreased by all income tax expense or benefit for such period, and (y)
  decreased by all dividends paid or accrued during such period. "Consolidated
  Net Income" of the Company for any period means the consolidated income or
  loss of the Company and its subsidiaries as set forth on the Company's
  consolidated statement of income for any such fiscal period and as determined
  in accordance with generally accepted accounting principles consistently
  applied, provided that (i) the results of operations of any person acquired in
  a pooling of interests transaction for any period prior to the date of such
  acquisition shall be excluded, and (ii) (a) any gains or losses from assets
  sales or reserves related thereto (other than a disposition of housing
  inventory in the ordinary course of business), (b) any gains or losses upon
  the extinguishment of indebtedness, including the write-off of unamortized
  deferred loan costs and unamortized original issue discount in connection with
  the retirement of the Company's 10% Bonds (as disclosed below), or any
  amortization relating to original issue discount and deferred loan costs in
  connection with such 10% Bonds, and (c) any extraordinary gains or losses,
  shall be excluded. No later than (i) 45 days after the end of the Company's
  fiscal quarter which is not the year-end or (ii) 90 days after the fiscal 
  year-end, as the case may be, the Chief Financial Officer of the Company shall
  determine if the Earnings Achievement has occurred.

       Under the terms of the Company's 10% Bonds due June 30, 1998, the Company
  may not declare or pay any dividend or make any other distribution on any
  equity securities of the Company (except dividends or distributions payable in
  equity securities of the Company), or purchase, redeem or otherwise acquire,
  or permit a subsidiary to purchase, redeem or otherwise acquire, any equity
  securities of the Company (other than equity securities acquired in exchange
  for securities of the Company and certain equity securities issued to
  employees, directors or consultants), if, upon giving effect to such dividend,
  distribution, redemption or other acquisition, the net worth of the Company
  would be reduced to less than an amount equal to 120% of the remaining
  indebtedness outstanding under the 10% Bonds. As of September 30, 1996, the
  indebtedness outstanding under the Company's 10% Bonds was approximately
  $3,750,000, including accrued interest thereon, and the consolidated net worth
  of the Company as of September 30, 1996 was approximately $7,294,000.

       Under the terms of the Company's loan agreement with Residential Funding
  Corporation, the Company may not declare or pay any dividend or make any other
  distribution on any shares of capital stock of the Company (other than for the
  dividends on the Class A Common Stock and Class B Common Stock set forth in
  the Company's Articles of Incorporation prior to the Earnings Achievement
  Date) in an amount which exceeds 50% of the previous fiscal year's audited
  pretax profits, to the extent that the same would cause an event of default
  under such agreement.

       The Company had determined that it is currently in the best interest of
  the Company and its shareholders to retain all earnings and to forego the
  August 15, 1996 and November 15, 1996 regularly scheduled cash dividend
  payment on its outstanding shares of Class A Common Stock. The Company's
  determination to forgo such payment was not the result of the inability of the
  Company to satisfy such cash payment, but rather the determination that such
  cash would be better used to facilitate the Company's growth, with the
  potential result of enhancing shareholder valuation. Cash dividends on the
  Class A Common Stock are cumulative, and accordingly, the amount of such
  dividends would accrue for the benefit of the Company's shareholders. The
  Company will continue to evaluate future cash dividend payments depending upon
  then current business conditions, opportunities for growth and on the then
  current financial condition of the Company. Accordingly, no assurance can be
  given as to when the Company plans on resuming the payment of such cash
  dividends.



                                      17
<PAGE>
 
  ITEM 6.   SELECTED FINANCIAL DATA

            The following table sets forth selected consolidated financial data
  for the Company.  As of September 30, 1994, Harry Weitzer contributed all of
  the outstanding shares of capital stock of certain corporations which were
  general partners of the Weitzer Homebuilding Partnership's (the "Weitzer
  Subsidiaries") to the Company in exchange for 1,500,000 shares of Class B
  Common Stock (the "Weitzer Entities Exchange").  The selected consolidated
  financial data give effect to the Weitzer Entities Exchange for each of the
  relevant periods, and treats the Weitzer Entities Exchange on a basis similar
  to a pooling of interests, which has the effect of combining all companies as
  if the combination had been effective for the periods presented.  Prior to May
  1995, the Company conducted substantially all of its operations through the
  Weitzer Homebuilding Partnerships.  See -"Business."  During that time, the
  Company used the equity method to account for its investment in the Weitzer
  Homebuilding Partnerships and, accordingly, the selected consolidated
  financial data of the Company during this time do not include the revenues,
  assets or equity of the Weitzer Homebuilding Partnerships.  Following the
  acquisition of the interests of the affiliates of the Financial Partner in
  May, 1995, the Company consolidated the operations of the Weitzer Homebuilding
  Partnerships with the financial statements of the Company.  The selected
  consolidated financial data should be read in conjunction with the
  consolidated financial statements of the Company and the notes thereto
  included elsewhere herein.  The selected consolidated financial data of the
  Company for the five fiscal years ended September 30, 1996 have been derived
  from the Company's audited consolidated financial statements.  Prior to
  September 30, 1994, the Weitzer Subsidiaries operated as S- corporations under
  the Internal Revenue Service Code, and, accordingly, the Weitzer Subsidiaries'
  taxable income was taxed directly to the sole shareholder.  Pro forma net
  income and pro forma net income per share amounts assume that the Company was
  subject to federal income taxes and taxed as a C-corporation at the effective
  tax rates in existence for the periods.



                                      18
<PAGE>
 
<TABLE>
<CAPTION>
                                                            YEARS ENDED SEPTEMBER 30,
                                          -----------------------------------------------------------------------
                                             1992           1993          1994            1995           1996
                                             ----           ----          ----            ----           ----
<S>                                       <C>            <C>           <C>            <C>            <C>
INCOME STATEMENT DATA:

Equity in earnings of 50%-owned
 affiliated partnerships/1/..............  $220,306       $509,334     $1,847,738       $686,711          --
Sales of homes...........................    --            112,390        998,849     13,450,684     $37,391,780
Net income (loss)........................   210,390        492,899      1,647,149         68,814      (2,962,046)
Net income (loss) per share..............    --             --             --              $0.03          $(0.81)
Pro forma net income.....................   138,197        307,603        966,597/2/      --              --
Pro forma net income per share...........     $0.08          $0.17          $0.54         --              --
Average number of shares outstanding..... 1,801,300/3/   1,801,300/3/   1,801,300/3/   2,277,950       3,649,204
Dividends declared per share.............    --             --             --              $0.08           $0.24

                                                                  September 30,
                                          -----------------------------------------------------------------------
                                             1992           1993          1994            1995           1996
                                             ----           ----          ----            ----           ----
<S>                                       <C>            <C>           <C>           <C>             <C>
BALANCE SHEET DATA:

Construction-in progress.................    $--            $--            $--       $30,167,295     $31,505,383
Total assets.............................   882,681      1,780,705      2,228,209     36,922,360      39,673,788
Total liabilities........................                  573,666      1,374,257     26,867,489      32,379,779
Shareholders' equity.....................   882,681      1,207,039        853,952     10,054,871       7,294,009
-----------------------------------------------------------------------------------------------------------------
</TABLE>
  /1/  Equity in earnings of 50%-owned affiliated partnerships represents
the Company's share of the income of the Weitzer Homebuilding Partnerships. Each
partnership's income was allocated to the partners first as a preferred  return
on partners' capital (which is principally contributed by the Financial Partner
affiliates), with the balance of income shared equally; all losses were shared
equally. Selected combined financial information of the Weitzer Homebuilding
Partnerships is set forth below.

  /2/  Includes a charge of approximately $262,000 relating to the write-
off of costs incurred in connection with a terminated merger agreement.

  /3/  Based upon (i) 1,500,000 shares of Class B Common Stock presently
outstanding, and (ii) 301,300 shares of Class A Common Stock (based on an
initial public offering price of $6.50 per share and net of Class A Common Stock
assumed to have been repurchased at such initial public offering price per share
under the treasury stock method) assumed to be outstanding upon the exercise for
$.10 per share of warrants then outstanding.



                                      19
<PAGE>
 
            Selected Combined Financial Information of the Weitzer
                         Homebuilding Partnerships

<TABLE>
<CAPTION>
                                           Years Ended September 30,
                              ----------------------------------------------------
                                   1992          1993         1994         1995
                                   ----          ----         ----         ----        
                                                                       (unaudited)
<S>                            <C>           <C>          <C>          <C>
INCOME STATEMENT DATA:

Sales of homes................ $21,336,433   $34,038,889  $53,320,277  $37,669,019
Cost of homes sold............  18,245,203    29,201,090   45,710,767   31,876,433
Other costs and expenses......   2,640,262     3,630,347    3,497,209    3,531,052
Net income....................     512,603     1,356,127    4,454,170    2,261,534

<CAPTION> 
                                           September 30,
                              ---------------------------------------
                                   1992          1993         1994
                                   ----          ----         ----      
<S>                            <C>           <C>          <C>          
BALANCE SHEET DATA/1/:

Real estate inventories....... $21,214,968   $29,224,358  $16,802,444
Total assets..................  24,426,848    34,961,017   21,187,373
Total liabilities.............  18,630,006    26,815,367   14,594,117
Partners' equity:
   Weitzer Entities...........     701,350     1,186,816    1,089,911
   Financial Partner..........   5,095,492     6,958,834    5,503,345
</TABLE>

------------------------------------
     /1/    Following the Partnership Acquisition in May, 1995, the Company
consolidates the operations of the Weitzer Homebuilding Partnerships with the
consolidated financial statements of the Company.



                                      20
<PAGE>
 
  ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS

       Prior to May 3, 1995, substantially all of the Company's homebuilding
  projects were conducted through the Weitzer Homebuilding Partnerships, in
  which a subsidiary of the Company held a 50% general partnership interest, and
  the Company accounted for its investment in the Weitzer Homebuilding
  Partnerships under the equity method of accounting, whereby its initial
  investment was recorded at cost, adjusted by its share of the Weitzer
  Homebuilding Partnerships' operating results and reduced by distributions
  received. On May 3, 1995, the Company used a portion of the net proceeds of
  its initial public offering to acquire the Financial Partner's interests in
  the Weitzer Homebuilding Partnerships and now consolidates the operations of
  these former partnerships with the financial statements of the Company.
  Accordingly, the following discussion of the financial condition and results
  of operations of the Company includes, in addition to a discussion of the
  results of operations of the Company for the periods presented, a discussion
  of the results of operations of the Weitzer Homebuilding Partnerships for the
  year ended September 30, 1995 compared to the Company's results of operations
  for the year ended September 30, 1996 and, a discussion of the results of
  operations of the Weitzer Homebuilding Partnerships for the Year ended
  September 30, 1995 compared to the year ended September 30, 1994.

       Except for the historical information contained herein, the matters
  discussed in this Form 10-K are forward looking statements which involve risks
  and uncertainties, including, but not limited to, economic, competitive,
  governmental, and technological factors affecting the Company's operations,
  markets, products, services, and prices and other factors discussed in the
  Company's other filings with the Securities and Exchange Commission.

  Results of Operations

  General
  -------

       Backlog and Available Lots for Sale or Under Option or Contract. The
  following table sets forth the Company's (including the Weitzer Homebuilding
  Partnerships') backlog, the available lots for sale and the available lots for
  construction for the periods presented. The backlog consists of homes under
  sales contracts and includes homes under construction, as well as homes which
  have been sold but not started. At September 30, 1996, approximately 61% of
  the homes in backlog were under construction. The available lots for sale
  refer to the number of lots the Company (including the Weitzer Homebuilding
  Partnerships) has acquired which it plans to construct homes on and excludes
  homes under sales contracts included in backlog. The available lots under
  option or contract refer to the number of lots as to which the Company
  (including the Weitzer Homebuilding Partnerships) has an option or a contract
  to acquire, but whose acquisition has not closed. The available lots under
  option or contract reflect the lots for projects which are currently being
  developed or are currently planned for future development. There can be no
  assurances that settlements of homes subject to sales contracts will occur or
  that all of the available lots for sale will be built on, or that the
  available lots under option or contract will be acquired or built on. The
  Company estimates that the cancellation rate on homes for 



                                      21
<PAGE>
 
  which a sales contract was signed for the fiscal year ended September 30, 1996
  was approximately 5%.


  Backlog of Homes, Available Lots for Sale and Available Lots Under Option or
  ----------------------------------------------------------------------------
  Contract
  --------
<TABLE>
<CAPTION>
 
                                                         September 30,
                                             -----------------------------------------
                                                1996           1995           1994
                                                ----           ----           ----       
  <S>                                          <C>            <C>            <C>
  Number of homes in backlog................           282            157            173
  Aggregate sales value of homes in                                       
   backlog..................................   $33,405,000    $19,201,000    $22,399,000 
  Available lots for sale...................           583          1,006            226
  Available lots under option or contract...           943          1,125          1,810
</TABLE>

  Comparison of the Years Ended September 30, 1996 and 1995
  ---------------------------------------------------------

  The Company as compared to Weitzer Homebuilding Partnerships

       The revenues from home sales decreased from approximately $37.7 million
  for the year ended September 30, 1995 to approximately $37.4 million for the
  year ended September 30, 1996.  This change reflects a 4.9% decrease in the
  average selling price of homes delivered (from $127,260 to $121,009) partially
  offset by a 4.4% increase in the number of homes delivered (296 to 309).

       Cost of homes sold increased from approximately $31.9 million for the
  year ended September 30, 1995 to approximately $35.4 million for the year
  ended September 30, 1996, primarily as a result of higher cost of sales for
  the Harmony Lakes project.  Cost of homes sold as a percentage of homes sales
  increased from 84.6% during the year ended September 30, 1995 to 94.7% for the
  year ended September 30, 1996.  The increase was primarily attributable to the
  overall lower profit margin being attained on the Harmony Lakes project
  because of higher borrowing and land development costs. Cost of homes sold
  also includes an impairment charge of $1,050,000 related to the Company's
  assessment of the recoverability of the Harmony lakes Project.

       Selling, general and administrative ("SG&A") expenses increased from
  approximately $3.5 million for the year ended September 30, 1995 to
  approximately $4.8 million for the year ended September 30, 1996.  SG&A
  expenses as a percentage of total revenues increased from 9.3% for the year
  ended September 30, 1995 to 12.7% for the year ended September 30, 1996.  The
  increase was primarily attributable to start-up selling expenses for certain
  projects for which there were minimal home sales.

       Net income decreased from approximately $2.3 million for the year ended
  September 30, 1995 to a loss of approximately $3.0 million for the year ended
  September 30, 1996, primarily as a result of the lower margins and impairment
  charge associated with the Harmony Lakes project.



                                      22
<PAGE>
 
  The Company

       Sales of homes and total revenues increased from approximately $13.5
  million and $14.3 million, respectively, for the year ended September 30, 1995
  to approximately $37.4 million and $37.8 million, respectively, for the year
  ended September 30, 1996,  while the Company's equity in the earnings of the
  Weitzer Homebuilding Partnerships decreased from approximately $687,000 for
  the year ended September 30, 1995 to zero during the year ended September 30,
  1996.  These changes are attributed to the Partnership Acquisition.
  Accordingly, the results of operations for the Company for the 1996 fiscal
  year as compared to the prior fiscal year may not be meaningful, as described
  herein.
 
       Total expenses increased from approximately $14.2 million for the year
  ended September 30, 1995 to approximately $40.7 million for the year ended
  September 30, 1996.  The increase is attributed primarily to the change in
  accounting for the investment in the Weitzer Homebuilding Partnerships
  resulting from the Partnership Acquisition.  SG&A expenses increased from
  approximately $2.3 million for the year ended September 30, 1995 to
  approximately $4.8 million for the year ended September 30, 1996.  The
  increase in SG&A expenses is also attributable to the change in accounting for
  the investment in the Weitzer Homebuilding Partnerships resulting from the
  Partnership Acquisition.  Discontinued land acquisition costs of approximately
  $311,000 for the year ended September 30, 1995 reflect the write-off of costs
  incurred in connection with the proposed acquisition of the land for the
  Company's El Dorado project for which the agreement to acquire the land
  expired and was not able to be extended on terms satisfactory to the Company.

       The Company's net income for the year ended September 30, 1995 was
  approximately $69,000 compared to a net loss of $3.0 million for the year
  ended September 30, 1996.

  Comparison of the Years Ended September 30, 1995 and 1994
  ---------------------------------------------------------

  Weitzer Homebuilding Partnerships

       Revenues from home sales decreased from approximately $53.3 million for
  the year ended September 30, 1994 to approximately  $37.7 million for the year
  ended September 30, 1995 as a result of a decrease in the volume of home
  sales.  This change reflects a 27.3% decrease in the number of homes delivered
  (from 407 to 296) and 2.9% decrease in average selling price of homes
  delivered (from $131,008 to $127,260). The large volume of home sales for the
  year ended September 30, 1994 was primarily due to an unusually high level of
  backlog and an increased demand for new homes which resulted from the effects
  of Hurricane Andrew (which occurred in August 1992).  The high level of
  backlog was caused by delays in the Weitzer Homebuilding Partnerships' ability
  to deliver homes as a result of shortages in, and increased costs of, labor
  and materials following Hurricane Andrew.  The increased costs of labor and
  materials also increased the sales prices of the Weitzer Homebuilding
  Partnerships' homes.  In addition, the lower volume of home sales for the year
  ended September 30, 1995 reflects (i) the completion of a number of
  homebuilding projects which were generating sales during the year ended
  September 30, 1994, (ii) unrelenting bad weather in the fourth quarter which
  delayed delivery of homes and home closings since prospective home buyers were
  unable 



                                      23
<PAGE>
 
  to obtain homeowners insurance during such periods (See "Item 1 - Business
  Marketing and Sales") and (iii) the fact that the Company is in the early
  development stage of certain new projects such as Weitzer at Harmony Lakes,
  The Hammocks at River Glen and the future phases of Weitzer at Serena Lakes II
  and Serena Lakes Townhomes which did not generate significant home closings
  during fiscal 1995.

       Cost of homes sold decreased from approximately $45.7 million for the
  year ended September 30, 1994 to approximately $31.9 million for the year
  ended September 30, 1995, primarily as a result of the decrease in the volume
  of home sales.  Cost of homes sold as a percentage of homes sales decreased
  from 85.7% for the year ended September 30, 1994 to 84.6% for the year ended
  September 30, 1995.  The decrease was primarily attributable to lower overall
  land costs related to the  homes being delivered during the 1995 period.

       SG&A expenses increased from approximately $3.4 million for the year
  ended September 30, 1994 to approximately $3.5 million for the year ended
  September 30, 1995.  SG&A expenses as a percentage of total revenues increased
  from 6.3% for the year ended September 30, 1994 to 9.3% for the year ended
  September 30, 1995.  The increase was primarily attributable to the decrease
  in the volume of home sales, combined with start-up selling expenses of
  approximately $395,000 for certain projects for which there were minimal or no
  home sales.

       Net income of the Weitzer Homebuilding Partnerships decreased 49.2% from
  approximately $4.5 million for the year ended September 30, 1994 to
  approximately $2.3 million for the year ended September 30, 1995, primarily as
  a result of the decrease in the volume of home sales.

  The Company

       Sales of homes and total revenues increased from approximately $1.0
  million and $2.9 million, respectively, for the year ended September 30, 1994
  to approximately $13.5 million and $14.3 million, respectively, for the year
  ended September 30, 1995,  while the Company's equity in the earnings of the
  Weitzer Homebuilding Partnerships decreased from approximately $1.8 million
  for the year ended September 30, 1994 to $687,000 for the year ended September
  30, 1995.  These changes are attributed to the Partnership Acquisition.  Sales
  of homes for the year ended September 30, 1994 consist of sales made by a
  wholly-owned subsidiary of the Company which was not affiliated with the
  Weitzer Homebuilding Partnerships.  There were no comparable sales of this
  type for the year ended September 30, 1995.

       Total expenses increased from approximately $1.3 million for the year
  ended September 30, 1994 to approximately $14.2 million for the year ended
  September 30, 1995.  The increase is attributed primarily to the change in
  accounting for the investment in the Weitzer Homebuilding Partnerships
  resulting from the Partnership Acquisition.  For the year ended September 30,
  1994, the Company had approximately $770,000 of costs of homes sold resulting
  from home sales made by a wholly-owned subsidiary of the Company which was not
  affiliated with the Weitzer Homebuilding Partnerships.  There were no
  comparable costs of homes sold outside of the Weitzer Homebuilding
  Partnerships for the year ended September 30, 1995.  SG&A expenses increased
  from approximately $275,000 for the year ended September 30, 1994 to
  approximately 



                                      24
<PAGE>
 
  $2.3 million for the year ended September 30, 1995. The increase in SG&A
  expenses is attributable to the change in accounting for the investment in the
  Weitzer Homebuilding Partnerships resulting from the Partnership Acquisition
  and to costs associated with the Weitzer at Harmony Lakes and The Hammocks at
  River Glen projects. Discontinued land acquisition costs of approximately
  $311,000 for the year ended September 30, 1995 reflect the write-off of costs
  incurred in connection with the proposed acquisition of the land for the
  Company's El Dorado project for which the agreement to acquire the land
  expired and was not able to be extended on terms satisfactory to the Company.

       After giving effect to a pro forma provision for income taxes, the
  Company's pro forma net income for the year ended September 30, 1994 was
  approximately $967,000 compared to net income of $69,000 for the year ended
  September 30, 1995.  Pro forma net income per share decreased from $.54 for
  the year ended September 30, 1994 to $.03 for the year ended September 30,
  1995 as a result of the decrease in net income and the increase in the average
  number of common shares outstanding which resulted from the Company's initial
  public offering and the exercise of warrants issued in a private placement.

  Liquidity and Capital Resources

       General.  The Company's financing needs depend upon its construction
  volume, asset turnover and land acquisitions.  The Company's and the Weitzer
  Homebuilding Partnerships' most significant source of funds has been
  acquisition, development and revolving construction loans provided by
  financial institutions or other lenders and seller financing for land
  purchases.  The Company will continue to seek outside financing for its future
  projects, including lender acquisition, development and construction loans,
  seller financing for land purchases, equity financing or debt financing. On
  April 26, 1995, the Company raised $8,579,000 of net proceeds from its initial
  public offering.

       Although the Company's Chairman of the Company's Board of Directors has
  personally guaranteed the existing bank borrowings and certain other
  indebtedness and obligations of the Company (including the Weitzer
  Homebuilding Partnerships), there can be no assurance he will continue to
  guarantee new borrowings or on what terms he would agree to guarantee new
  borrowings.  Effective September 30, 1994, the Company entered into an
  indemnification agreement with Company's Chairman of the Company's Board of
  Directors pursuant to which the Company will indemnify him against any
  expenses or costs he incurs after such date, arising from the personal
  guaranty of any indebtedness of the Company, any of its subsidiaries or any
  Weitzer Homebuilding Partnership.
 
       The principal amount of the 10% Bonds, together with accrued and unpaid
  interest thereon, will become due and payable in full upon the receipt by the
  Company of at least $12.0 million of gross proceeds from the public or private
  sale of its equity securities (other than sales prior to October 7, 1994 or
  from the sale of units in the Private Placement).  As of September 30, 1996,
  the Company will be required to repay the 10% Bonds upon any additional sales
  of equity securities in excess of approximately $815,000.  While the 10% Bonds
  are outstanding, this prepayment obligation will materially adversely affect
  the Company's ability to finance its activities through the sale of equity
  securities.



                                      25
<PAGE>
 
       Annual dividends on the outstanding shares of  Class A Common Stock if,
  when and as declared by the Board of Directors of the Company to the extent
  funds are legally available therefor, will be approximately $767,000.
  Dividends not paid will accumulate even though such dividends are not declared
  (See Dividend).

       At September 30, 1996, the Company had borrowings from banks and third
  parties aggregating approximately $28.1 million.  Scheduled and estimated
  maturities of the Company's borrowings for the years ended September 30, 1997,
  1998 and  1999 are expected to be approximately $2.4 million, $9.3 million and
  $13.2 million, respectively.  The Company anticipates that it will fund the
  maturities of its debt and required expenditures relating to its developments
  primarily with cash flow from operations and construction financing.

       On June 30, 1995, the Company entered into a loan agreement with
  Residential Funding Corporation ("RFC"), for a revolving credit facility (the
  "RFC Credit Facility") of $25.0 million (which may be increased to $50.0
  million by the mutual consent of the parties) to be used by the Company for
  the acquisition, development and construction of new residential projects.
  Each project to be funded under the RFC Credit Facility will be subject to
  RFC's approval in its sole discretion. The revolving credit loans will have a
  maturity of no greater than 36 months from the date of the initial project
  closing and bears interest at the prime rate plus 1.00% per annum. In
  addition, RFC will receive an annual 0.5% commitment fee on the total RFC
  Credit Facility and a fee of 1% to 2% of the gross sales price of each unit or
  lot sold for which funds have been advanced from the RFC Credit Facility. The
  RFC Credit Facility is collateralized by a first mortgage on all property for
  which funds have been disbursed from the RFC Credit Facility. Simultaneously
  with the closing of the RFC Credit Facility, RFC approved a borrowing of $7.1
  million under the RFC Credit Facility to be used for the Weitzer at Deerfield
  Beach community. The acquisition, development and construction loans payable
  of Weitzer at Deerfield Beach, Inc. relate to the Company's acquisition,
  through a subsidiary in May 1995, of land in Deerfield Beach, Florida, where
  it is  developing the Weitzer at Deerfield Beach community. As of September
  30, 1996, approximately $3.0 million remained available for the Deerfield
  Beach community project. On January 24, 1996 the RFC Credit Facility was
  amended to include (a) a maximum $1,000,000 promissory note for funding a
  portion of the initial escrow requirements for the planed acquisition of land
  to be used for the Malibu Bay at Chapel Trail project and (b) a $1,000,000
  working capital note. As of September 30, 1996 approximately $600,000 is
  available under the working capital note.  On February 28, 1996, RFC approved
  a borrowing of $5.5 million under the RFC Credit Facility to be used for the
  Tesoro at Forest Lakes project. As of September 30, 1996, approximately $3.3
  million remained available for the Tesoro at Forest Lakes project. On June 30,
  1996, RFC approved a borrowing of $11.0 million under the RFC Credit Facility
  to be used for the Weitzer at Harmony Lakes project. As of September 30, 1996,
  approximately $5.5 million remained available for the Weitzer at Harmony Lakes
  project. In conjunction with the Weitzer at Harmony Lakes approval the overall
  RFC Credit Facility was increased to $25.6 million.

       The acquisition, development and construction loans payable of Weitzer
  Serena Lakes II, Inc. and Weitzer Serena Lakes Townhomes, Inc., wholly-owned
  subsidiaries of the Company, relate to the acquisition in August 1995, of land
  in Miami, Florida, where it is developing the 



                                      26
<PAGE>
 
  Weitzer Serena Lakes II and Weitzer Serena Lakes Townhomes projects. This loan
  consists of (i) a revolving line of credit of $6.5 million to be used by such
  subsidiaries for the acquisition and development of the Weitzer at Serena
  Lakes II project and Serena Lakes Townhomes project (the "A&D Line of
  Credit"),(ii) a revolving line of credit of $5.0 million to be used by such
  subsidiaries for the construction of the Weitzer at Serena Lakes II project
  and Serena Lakes Townhomes project (the "Construction Line of Credit") and
  (iii) a promissory note for $300,000 which proceeds were used to purchase an
  adjoining parcel of land to the Weitzer at Serena Lakes II project. The
  revolving acquisition and development loan has a maturity of five years and
  bears interest at the prime rate plus 1.0% per annum, while the construction
  loan has a maturity of five years and bears interest at the prime rate plus
  0.875% per annum. The promissory note matures on July 8, 1999 and bear
  interest at the prime rate plus 1.0% per annum. The lines of credit and
  promissory note are collateralized by a first mortgage on all properties for
  which funds have been disbursed. Both the Company and the Company's Chairman
  of the Board and his wife have guaranteed the obligations of the Company's
  subsidiaries under these loans. In addition, the Company will be required to
  maintain a 25% equity position in the projects for which the acquisition and
  development line of credit is to be used. At September 30, 1996, approximately
  $3.7 million remained available under the acquisition and development line of
  credit and $3.5 million remained available under the construction line of
  credit.
 
       Land Acquisition and Construction Financing.  The Company is continually
  exploring opportunities to purchase parcels of land for its homebuilding
  operations and is, at any given time, in various stages of proposing, making
  offers for, and negotiating the acquisition of various parcels, whether
  outright or through options.   The closing of the contemplated purchases are,
  in most cases, subject to a number of conditions, including the Company's
  completion of a satisfactory due diligence investigation and obtaining certain
  required regulatory approvals for development.

       The Company has options remaining to acquire the land for an aggregate of
  284 additional lots for the Serena Lakes Townhomes community which are
  expected to be exercised pursuant to a takedown in January 1997.  The purchase
  price to close on the acquisition of the land underlying such option is
  expected to be approximately $954,000, and will be funded along with the
  related development costs with the A&D Line of Credit.

       In June 1995, the Company entered into agreements to acquire land for 500
  townhomes in the Chapel Trail area of Southwest Broward County and 251
  townhomes in the Forest Lakes area of Southwest Dade County.  The Chapel Trail
  property is expected to be purchased in two phases, and the aggregate purchase
  price will be $9 million.  The Forest Lakes property is being purchased in
  three phases, and the aggregate purchase price will be $5.65 million.
 
       Debt Covenants.  The RFC Credit Facility, the A&D Line of Credit and the
  Construction Line of Credit require the Company to maintain certain financial
  ratios.  The Company was not in compliance with these covenants at September
  30, 1996.  The lenders have waived compliance with these covenants through
  fiscal 1997. If an event of default should occur under the bank loan
  agreements, the RFC Credit Facility, the A& D Line of Credit or the
  Construction Line of Credit, the applicable lender would have the immediate
  right to accelerate the affected 



                                      27
<PAGE>
 
  loan(s) and foreclose on the assets collateralizing such loans and there is no
  assurance the Company would be able to repay or refinance such borrowings
  which would have a material adverse effect on the Company.

       Cash Flows.  During the year ended September 30, 1996, the Company had
  $3.7 million of net cash used in operating activities, primarily as a result
  of the net loss from operations and a decrease in accounts payable and accrued
  liabilities.  During that period, the Company had net cash provided by
  financing activities of $5.7 million, arising principally from the financing
  for the Weitzer at Forest Lakes and Deerfield projects.   During the year
  ended September 30, 1995, the Company had $17.0 million of net cash used in
  operating activities, primarily as a result of the purchase of the land for
  the Weitzer at Harmony Lakes project and the Hammocks at River Glen community
  project.  During that period, the Company had net cash provided by financing
  activities of $21.8 million, arising principally from the financing for the
  Weitzer at Harmony Lakes project, the Hammocks at River Glen community project
  and the proceeds from the Company's initial public offering.  Net cash
  provided by operating activities of the Weitzer Homebuilding Partnerships was
  approximately $16.2 million during fiscal 1994.  Despite the increase in net
  cash from operating activities for fiscal 1994, cash decreased by
  approximately $366,000 during this period as the cash provided by operating
  activities was offset by net cash used in financing activities of
  approximately $16.3 million for the same period, primarily reflecting
  increased payments on acquisition, development and construction loans and
  distributions to partners.

  Variability of Operating Results; Factors Affecting Future Results of
  Operations and Liquidity

       The Company has experienced. and expects to continue to experience,
  significant variability in sales and net income as a result of, among other
  things, the stage of development of its projects, the timing of home closings,
  the cyclical nature of the homebuilding industry, changes in the costs of
  materials and labor, and the changes in prevailing interest rates and other
  economic factors.  The Company's new sales contracts and home closings
  typically vary from period to period depending primarily on the stages of
  development of its projects.  In the early stages of a project's development,
  the Company incurs significant start-up costs associated with, among other
  things, project design, land acquisition and development, zoning and
  permitting, construction and marketing expenses. Since revenues are recognized
  only upon the transfer of title at the closing of a sale of a home, there are
  no revenues during the early stages of a project. During the later stages of a
  project, however, costs are lower in relation to the revenues recognized.
  Accordingly, the Company's historical financial performance is not necessarily
  a meaningful indicator of future results and, in general, management expects
  that financial results may vary significantly from period to period. The
  Company's results of operations and liquidity could be affected by prevailing
  interest rates. Lower interest rates may result in increased demand for homes,
  increased sales, lower financing costs and lower costs of homes sold, while
  higher interest rates may result in lower demand form homes, lower sales,
  higher financing costs and higher costs of homes sold and, subsequently,
  reduced profitability. Although the Company has not experienced a sharp
  decline in the demand for its homes during recent periods in which interest
  rates have risen, further increases in interest rates could result in such a
  decline and have a material adverse effect on the Company's future results of
  operations and liquidity.



                                      28
<PAGE>
 
  Inflation

       The Company, as well as the homebuilding industry in general, may be
  adversely affected during periods of high inflation, primarily because of
  higher land and construction costs.  In addition, higher mortgage interest
  rates may significantly affect the affordability of permanent mortgage
  financing to prospective purchasers.  Inflation also increases the Company's
  interest costs and costs of labor and materials.  The Company attempts to pass
  through to its homebuyers any increases in costs through increased selling
  prices and, for the past three fiscal years, inflation has not had a material
  adverse effect on the Company's results of operations.  There is no assurance,
  however, that inflation will not have a material adverse impact on the
  Company's future results of operations.



                                      29
<PAGE>
 
  ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO

           FINANCIAL STATEMENTS AND SCHEDULES

                                                                            Page
  --------------------------------------------------------------------------

  Report of Independent Accountants........................................   31

  Consolidated Balance Sheets as of September 30, 1996 and 1995............   32

  Consolidated Statements of Operations for the Years Ended
  September 30, 1996, 1995 and 1994........................................   33

  Consolidated Statements of Changes in Shareholders' Equity for the 
  Years Ended September 30, 1996, 1995 and 1994............................   34

  Consolidated Statements of Cash Flows for the Years Ended
  September 30, 1996, 1995 and 1994........................................   35

  Notes to Consolidated Financial Statements...............................   36


                                      30



                                      
<PAGE>
 
REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors and Shareholders
Weitzer Homebuilders Incorporated and Subsidiaries


We have audited the accompanying consolidated balance sheets of Weitzer 
Homebuilders Incorporated and Subsidiaries as of September 30, 1996 and 1995, 
and the related consolidated statements of income, shareholders' equity, and 
cash flows for each of the three years in the period ended September 30, 1996. 
These financial statements are the responsibility of the Company's management. 
Our responsibility is to express an opinion on these financial statements based 
on our audits.

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

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the consolidated financial position of Weitzer
Homebuilders Incorporated and Subsidiaries as of September 30, 1996 and 1995, 
and the consolidated results of their operations and their cash flows for each 
of the three years in the period ended September 30, 1996 in conformity with 
generally accepted accounting principles.


Coopers & Lybrand L.L.P.


/s/ Coopers & Lybrand L.L.P.


Miami, Florida
November 15, 1996, except for the last paragraph of
 Note 3 as to which the date is January 13, 1997



                                      31
<PAGE>

              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES 
                          CONSOLIDATED BALANCE SHEETS
                          SEPTEMBER 30, 1996 AND 1995

<TABLE> 
<CAPTION> 
                                                                             1996           1995
                                                                         ------------   ------------
ASSETS
<S>                                                                       <C>           <C> 
Cash                                                                      $  1,521,799   $  1,622,882
Restricted escrow funds                                                      1,666,121      1,815,859
Advances for future projects                                                 1,945,277        280,290
Construction-in-progress                                                    31,505,383     30,167,295
Model furnishings, net of accumulated depreciation
  of $238,640 and $159,284, respectively                                       870,251        565,703
Deferred loan costs, net of accumulated amortization
  of $752,030 and $454,790, respectively                                       628,480        769,387
Goodwill, net of accumulated amortization of $40,552
  and $11,928, respectively                                                    388,821        417,445
Other assets                                                                 1,147,656      1,283,499
                                                                           -----------    -----------

                                                                          $ 39,673,788   $ 36,922,360
                                                                           ===========    ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Customer deposits                                                         $  1,666,121   $    965,659
Accounts payable and accrued liabilities                                     2,575,315      3,891,949
Acquisition, development and construction loans payable                     23,164,507     18,294,562
10% bonds payable, net of discount                                           3,371,650      3,155,450
5% debentures                                                                1,185,000        -
Notes and loans payable                                                        417,186        559,869
                                                                           -----------    -----------

                                                                            32,379,779     26,867,489
                                                                           -----------    -----------
Commitments and contingencies (Note 11)

Shareholders' equity:
  Preferred stock, $.01 par, 5,000,000 shares authorized,
    none issued and outstanding                                               -               -
  Class A common stock, $.01 par, 40,000,000 shares authorized,
    2,360,254 and 2,032,663 shares issued and outstanding,
    repectively                                                                 23,603         20,327
  Class B common stock, $.01 par, 1,500,000 shares authorized,
    issued and outstanding                                                      15,000         15,000
  Additional paid-in capital                                                10,330,950     10,133,042
  Accumulated deficit                                                       (3,075,544)      (113,498)
                                                                           -----------    -----------

                                                                             7,294,009     10,054,871
                                                                           -----------    -----------

                                                                          $ 39,673,788   $ 36,922,360
                                                                           ===========    ===========
</TABLE> 



                See notes to consolidated financial statements



                                      32
<PAGE>


              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994

<TABLE> 
<CAPTION> 

                                                             1996                 1995                 1994
                                                        --------------      ---------------      --------------
<S>                                                     <C>                 <C>                  <C> 
Revenues:
  Sales of homes                                        $   37,391,780      $    13,450,684      $      998,849
  Equity in earnings of affiliated partnerships                 -                   686,711           1,847,738
  Interest income                                              149,459              130,664               7,055
  Other income                                                 231,858               63,967              -
                                                        --------------      ---------------      --------------
                                                            37,773,097           14,332,026           2,853,642
                                                        --------------      ---------------      --------------

Operating costs and expenses:
  Costs of homes sold                                       35,425,713           11,403,230             769,561
  Selling expenses                                           2,527,568            1,327,009              -
  General and administrative expenses                        2,234,404              922,637             275,062
  Depreciation and amortization                                449,368              197,942              -
  Discontinued land acquisitions                                32,254              310,686              -
  Interest expense                                              65,836               64,708              -
                                                        --------------      ---------------      --------------
                                                            40,735,143           14,226,212           1,044,623
                                                        --------------      ---------------      --------------

Income (loss) from operations                               (2,962,046)             105,814           1,809,019

  Write-off of merger costs                                     -                    -                  261,870
                                                        --------------      ---------------      --------------

Income (loss) before income taxes                           (2,962,046)             105,814           1,547,149

Income tax provision (benefit)                                  -                    37,000            (100,000)
                                                        --------------      ---------------      --------------

Net income (loss)                                       $   (2,962,046)     $        68,814      $    1,647,149
                                                        ==============      ===============      ==============

Pro forma data (unaudited):
  Income before income taxes as reported above                                                   $    1,547,149
  Charge in lieu of income taxes                                                                        580,552
                                                                                                 --------------

  Pro forma net income                                                                           $      966,597
                                                                                                 --------------
Earnings (loss) per share:
  Net income (loss) per common share                    $        (0.81)     $          0.03
                                                        ==============      ===============      

  Pro forma net income per common share                                                          $         0.54
                                                                                                 ==============

  Weighted average number of common shares outstanding       3,649,204            2,277,950           1,801,300
                                                        ==============      ===============      ==============
</TABLE> 
                See notes to consolidated financial statements





                                      33
<PAGE>


              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
             FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994

<TABLE> 
<CAPTION> 
                                                      Class A Common Stock               Class B Common Stock   
                                                  -----------------------------     ------------------------------      
                                                     Number                            Number                       
                                                    of shares           Amount        of shares            Amount       
                                                  -------------        --------     --------------        --------      
<S>                                               <C>                  <C>          <C>                   <C> 
Balance October 1, 1993                                      -         $     -          $1,500,000        $ 15,000      
                                                                                                                        
Contributions                                                -               -                  -               -       
                                                                                                                        
Distributions                                                -               -                  -               -       
                                                                                                                        
Transfer of S-corporation undistributed earnings             -               -                  -               -       
                                                                                                                        
Net income                                                   -               -                  -               -       
                                                    -----------        --------         ----------        --------      
                                                                                    
Balance September 30, 1994                                   -               -           1,500,000          15,000      
                                                                                                                        
Warrants issued in connection with                                                                                      
  private placement                                     432,663           4,327                 -               -       
                                                                                                                        
Issuance of common stock                              1,600,000          16,000                 -               -       
                                                                                                                        
Dividends - $0.08125 per share                               -               -                  -               -       
                                                                                                                        
Net income                                                   -               -                  -               -       
                                                    -----------        --------         ----------        --------      
                                                                                    
Balance September 30, 1995                            2,032,663          20,327          1,500,000          15,000      
                                                                                                                        
Conversion of 5% debentures                             327,591           3,276                 -               -       
                                                                                                                        
Dividends - $0.24375 per share                               -               -                  -               -       
                                                                                                                        
Net loss                                                     -               -                  -               -       
                                                    -----------        --------         ----------        --------      
                                                                                    
Balance September 30, 1996                          $ 2,360,254        $ 23,603         $1,500,000       $  15,000      
                                                    ===========        ========         ==========        ========      

<CAPTION> 
                                                            Additional
                                                             Paid-in           Accumulated
                                                             Capital             Deficit           Total
                                                           ------------       -------------     -----------
<S>                                                        <C>                <C>               <C> 
Balance October 1, 1993                                    $ 1,466,536        $   (274,497)     $ 1,207,039
                                             
Contributions                                                   10,385                  -            10,385
                                             
Distributions                                                 (800,313)         (1,210,308)      (2,010,621)
                                             
Transfer of S-corporation undistributed earnings               344,656            (344,656)               -
                                             
Net income                                                          -            1,647,149        1,647,149 
                                                           ------------       -------------       ----------

Balance September 30, 1994                                   1,021,264            (182,312)         853,852 
                                             
Warrants issued in connection with           
  private placement                                            714,344                  -           718,671 
                                             
Issuance of common stock                                     8,562,588                  -         8,578,588 
                                             
Dividends - $0.08125 per share                                (165,154)                 -          (165,154)
                                             
Net income                                                                          68,814           68,814
                                                           ------------       -------------      -----------

Balance September 30, 1995                                  10,133,042            (113,498)      10,054,871 
                                             
Conversion of 5% debentures                                    693,370                  -           696,646 
                                             
Dividends - $0.24375 per share                                (495,462)                 -          (495,452)
                                             
Net loss                                                            -           (2,962,046)      (2,962,046)
                                                           ------------       -------------      -----------

Balance September 30, 1996                                 $10,330,950        $ (3,075,544)      $7,294,009 
                                                           ============       =============      ===========
</TABLE> 

                See notes to consolidated financial statements



                                      34
<PAGE>


              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION> 
                                                                         1996              1995                1994
                                                                     ------------      -------------      -------------
<S>                                                                 <C>               <C>                <C>
Cash flows from operating activities:
  Net income (loss)                                                 $  (2,962,046)    $       68,814     $   1,647,149
  Adjustments to reconcile net income (loss)
      to net cash provided by (used in)
      operating activities:
    Equity in earnings of affiliated
      partnerships                                                              -           (686,711)        (1,847,738)
    Current distribution of income from
      partnerships                                                              -             42,614          1,162,664
    Depreciation, amortization and other non-cash charges                 607,747            197,942                  -
    Write-off of merger costs                                                   -                  -            261,870
    Deferred income taxes                                                       -             37,000           (100,000)
    Changes in assets and liabilities, net of acquisition:
      Restricted escrow funds                                             149,738           (931,187)                 -
      Construction-in-progress                                           (888,720)       (17,688,606)           289,265
      Other assets                                                         51,242           (783,673)            (3,735)
      Customer deposits                                                   700,462             80,987           (536,778)
      Accounts payable and accrued liabilities                         (1,316,634)         2,694,734            149,111
        Net cash provided by (used in)                               ------------      -------------      -------------
        operating activities
                                                                       (3,658,211)       (16,968,086)         1,021,808
                                                                     ------------      -------------      -------------

Cash flows from investing activities:
  Distributions from affiliated partnerships                                    -                  -            854,762
  Contributions to affiliated partnerships                                      -                  -            (72,783)
  Purchase of affiliated partnerships, net of cash acquired                     -         (4,056,370)                 -
  Purchase of model furnishings                                          (461,254)          (362,031)                 -
  Advances for future projects                                         (1,664,987)         1,118,619           (684,480)
                                                                     ------------      -------------      -------------
        Net cash provided by (used in)
          investing activities                                         (2,126,241)        (3,299,782)            97,499
                                                                     ------------      -------------      -------------

Cash flows from financing activities:
  Loan from shareholder                                                         -             70,000            570,219
  Acquisition, development and construction loan borrowings            39,433,675         14,136,364                  -
  Payments on acquisition, development and construction loans         (34,563,730)        (3,582,984)                 -
  Payment of loan from shareholder                                              -           (640,219)                 -
  Capital contributions by shareholder                                          -                  -             10,385
  Note payable borrowings                                                  58,976            619,500            500,000
  Payments on notes payable                                              (201,659)          (634,215)                 -
  10% bonds payable borrowing                                                   -          3,750,000                  -
  Loan, deferred registration and
    terminated merger costs                                              (291,882)          (159,002)          (540,786)
  Proceeds from 5% debentures                                           1,743,451                  -                  -
  Proceeds from issuance of common stock and warrants,
    net of issuance costs                                                       -          8,443,243                  -
  Dividends and distributions to shareholders                            (495,462)          (165,154)        (2,010,621)
                                                                     ------------      -------------      -------------
        Net cash provided by (used in)
          financing activities                                          5,683,369         21,837,533         (1,470,803)
                                                                     ------------      -------------      -------------

Net increase (decrease) in cash                                          (101,083)         1,569,665           (351,496)

Cash, beginning of period                                               1,622,882             53,217            404,713
                                                                     ------------      -------------      -------------
 
Cash, end of period                                                 $   1,521,799     $    1,622,882     $       53,217
                                                                     ============      =============      =============
Cash paid during the period for interest, net of
  amounts capitalized                                               $     103,336     $       27,208     $            -
                                                                     ============      =============      =============
</TABLE>

                See notes to consolidated financial statements



                                      35
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION, BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

     Weitzer Homebuilders Incorporated (the "Company") was incorporated under
the laws of the State of Florida in June 1994, and engages, through its wholly-
owned subsidiaries, in the design, construction and sale of moderately-priced
single-family residences and townhouses in Dade and Broward counties in
Southeast Florida.
     On September 30, 1994, the Company acquired all the outstanding shares of
certain entities in exchange (the "Weitzer Entities Exchange") for issuing 
Class B Common Stock to the Company's Chairman of the Board. This transaction
was treated as a combination of entities under common control, and was accounted
for similar to a pooling of interests. These entities served as general partners
of partnerships (the "Weitzer Homebuilding Partnerships") which were engaged in
the above mentioned homebuilding activities.
     On May 3, 1995, the Company acquired the remaining partner interests in the
Weitzer Homebuilding Partnerships from affiliates of an unrelated entity (the
"Financial Partner") which previously provided funding for real estate
acquisition, development and construction. The purchase of these interests was
accounted for by the Company under the purchase method of accounting for
business combinations. Accordingly, the results of operations of the Weitzer
Homebuilding Partnerships have been included in the Company's consolidated
financial statements since the date of this acquisition.

     The following is a summary of the Company's significant accounting
policies:

Consolidation
     The consolidated financial statements include the accounts of the Company
and all of its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated. Prior to May 3, 1995 the Company
used the equity method of accounting for its significant investments in the
Weitzer Homebuilding Partnerships. Under this method, the Company's initial
investment was recorded at cost, and adjusted by its share of each partnerships
operating results.

Accounting Estimates
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.

Revenue Recognition
     Sales of homes and all related costs are recognized as revenue and costs of
homes sold, respectively, when title is transferred at closing.



                                      36
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash, Restricted Escrow Funds and Customer Deposits
     The Company maintains its cash in bank accounts which, at times, may exceed
federally insured limits. The Company has not experienced any losses in such
accounts. The Company's restricted escrow funds are comprised of customer
deposits. Contracts with customers generally require deposits of 5-10% of the
purchase price of the property before construction commences.

Construction-in-Progress
     Construction-in-progress is stated at the lower of cost or estimated net
realizable value and consists of land and land development costs, direct
construction costs, and other costs. Land and land development costs are
allocated to housing units based on their relative sales values. Direct
construction costs are assigned to housing units based on specific
identification. All other costs are allocated to housing units based on a pro
rata basis. The Company capitalizes interest, real estate taxes and similar
development costs incurred during the development and construction period.
Interest capitalized during fiscal 1996, 1995 and 1994 amounted to $2,020,985,
$1,554,633 and $0, respectively.
     The Company periodically evaluates the carrying value of individual real
estate projects based on estimated fair value less costs to complete and sell.
During the forth quarter of fiscal 1996, the Company recorded an impairment loss
of $1,050,000.

Model Furnishings
     Model furnishings are stated at cost. Depreciation is being provided on the
declining-balance and straight-line methods over the estimated useful lives of
the furnishings.

Advances for Future Projects
     Advances for future projects represent deposits made by the Company on
contracts to purchase land for future development which may be refundable under
certain circumstances.

Deferred Loan Costs
     Costs incurred in connection with the issuance of bonds and other
borrowings of the Company are deferred, and amortized over the term of the
related debt.

Goodwill
     The acquisition of the interests of the affiliates of the Financial Partner
of the Weitzer Homebuilding Partnerships (the "Financial Partner Interests")
resulted in a purchase price in excess of the fair value of net assets acquired
in the amount of $429,373. Such amount is reflected in the accompanying balance
sheet at September 30, 1996, net of accumulated amortization. The amount is
being amortized on a straight-line basis over 7 years prospectively. The
realizabilty of goodwill is evaluated periodically as events or circumstances
indicate a possible inability to recover its carrying amount. Such evaluation is
based on various analyses including cash flow and profitability projections of
the Company's various development projects. Based on its review, the Company
does not believe that an impairment of its goodwill has occurred.



                                      37
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FININCIAL STATEMENTS

Fair Value of Financial Instruments
     The carrying amounts of the Company's borrowings under its acquisition,
development and construction loans payable approximate fair value due to the
short term nature of the borrowings or their adjustable rates fixed to market
conditions. The 5% debentures approximate fair value based on comparison with
market values established on settlement of the obligation within three months
subsequent to September 30, 1996. The Company has not evaluated the carrying
amount of the 10% bonds due to the difficulty in establishing a fair market
value for the instrument and excessive costs involved in developing a model
valuation of obtaining and independent valuation.

Warranties
     The Company provides an accrual for future warranty costs based upon the
Company's past experience of the amount of claims actually made.

Income Taxes
     Deferred tax assets and liabilities are recorded based on the differences
between financial statement and income tax bases of the Company's assets and
liabilities using enacted tax rates in effect for the year in which these
differences are expected to reverse. The Company establishes valuation
allowances against its deferred tax asset accounts, when necessary, to more
accurately reflect tax benefits that are expected to be realized by the Company
in the future.

Earnings Per Share
     Net income and pro forma net income per share are based on the weighted
average number of shares of Common Stock outstanding during each year, after
giving effect to stock splits and warrants. Pro forma net income and pro forma
net income per share amounts assume that the Company was subject to federal
income taxes and taxed as a C-corporation at the effective tax rates in
existence for the periods.

NOTE 2 - CONSTRUCTION-IN-PROGRESS

Construction-in-progress consists of the following at September 30, 1996 and
1995:

<TABLE>
<CAPTION>
                                                1996           1995
                                            -----------    -----------
<S>                                        <C>            <C>
Land and land development                  $ 21,193,750   $ 21,259,277
Direct construction costs                     6,230,021      6,262,260
Construction period interest, property
 taxes, overhead and other                    4,081,612      2,645,758
                                            -----------    ----------- 
                                           $ 31,505,383   $ 30,167,295
                                            ===========    ===========
</TABLE>



                                      38
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       NOTE 3 - ACQUISITION, DEVELOPMENT AND CONSTRUCTION LOANS PAYABLE

     Acquisition, development and construction loans payable consist of loans of
the following subsidiaries at September 30, 1996 and 1995:

<TABLE>
<CAPTION>
                                                         1996           1995
                                                     -----------    -----------
<S>                                                 <C>            <C>
  Weitzer Homebuilding Partnerships                 $    780,217   $  4,380,264

  Weitzer Serena Lakes Homes II, Inc. and Weitzer   
   Serena Lakes Townhomes, Inc.                        4,591,955      2,902,930

  Weitzer at Harmony Lakes, Inc.                      10,073,326      9,413,606

  Weitzer at Deerfield Beach, Inc.                     4,111,916      1,597,762

  Weitzer at Forest Lakes, Inc.                        2,207,093         -

  Weitzer Homebuilders Incorporated                    1,400,000         -
                                                     -----------    -----------
                                                    $ 23,164,507   $ 18,294,562
                                                     ===========    ===========
</TABLE>

     The Company has entered into a loan agreement with Residential Funding
Corporation ("RFC") for a revolving credit facility (the "RFC Credit Facility")
of $25.6 million (which may be increased to $50.0 million by the mutual consent
of the parties) to be used for the acquisition, development and construction of
new residential projects. RFC has approved the following borrowings:  (i)
Weitzer at Harmony Lakes, Inc. - $11.0 million, (ii) Weitzer at Deerfield Beach,
Inc. - $7.1 million, (iii) Weitzer at Forest Lakes, Inc. - $5.5 million and (iv)
Weitzer Homebuilders Incorporated - $2.0 million. Each borrowing under the RFC
facility has a maturity of no greater than 36 months from the date of initial
project closing and bears interest at the prime rate plus 1.0%. RFC also
receives a fee of 1.0% to 2.0% of the gross sales price of each unit or lot sold
financed through the RFC Credit Facility. The RFC Credit Facility is
collateralized by a first mortgage on all property for which funds have been
disbursed from the RFC Credit Facility. Under the terms of the RFC Credit
Facility, the Company may not declare or pay any dividend or make any other
distribution on any shares of capital stock of the Company (other than for
dividends on Class A Common Stock and Class B Common Stock as discussed in Note
10) in an amount which exceeds 50% of the previous fiscal year's audited pretax
profits.

     Weitzer Homebuilding Partnerships. These loans require mandatory repayments
of principal from the net proceeds from the sales of homes and mature from
October 1996 to March 1997. Interest rates range from 1.0% to 1.5% over the
prime rate (9.25% to 9.75% as of September 30, 1996) and interest is payable
monthly. These loans are collateralized by substantially all of the assets of
the respective development and are guaranteed by the Company's Chairman of the
Board.

     Weitzer Serena Lakes Homes II, Inc. and Weitzer Serena Lakes Townhomess,
Inc. Consists of (i) a $6.5 million line of credit for land acquisition and
development which matures August, 2000 and bears interest at the prime rate plus
1.0%, (ii) a $5.0 million line of credit for



                                      39
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

construction which matures August, 2000 and bears interest at the prime rate 
plus 0.875% and (iii) a $300,000 promissory note for miscellaneous land 
acquisition which matures July, 1999 and bears interest at the prime rate plus 
1.0%. As of September 30, 1996, approximately $3.7 million and $3.5 million was 
available under the lines of credit for land acquisition and development and 
construction, respectively. These loans are collateralized by a first mortgage 
on all properties for which funds have been disbursed and are guaranteed by the 
Company and the Company's Chairman of the Board.

     Weitzer at Harmony Lakes, Inc. Consists of (i) a $12.6 million revolving
mortage note for the financing of developed lots and unit construction which
matures October, 1998 and bears interest at the prime rate plus 1.5% and (ii) a
$11.0 million borrowing under the RFC Credit Facility for debt refinancing which
matures June 1999. As of September 30, 1996, approximately $8.0 million and $5.5
million was available under the revolving mortgage note and revolving facility,
respectively. The revolving mortgage note is collateralized by a first mortgage
on all properties for which funds have been disbursed and is guaranteed by the
Company.  The Weitzer at Harmony Lakes, Inc. revolving mortgage note requires
the Company to maintain a minimum tangible net worth. The Company was not in
compliance with this covenants at September 30, 1996; however, on January 13,
1997 the lender has modified the covenant so that the Company was in compliance
at September 30, 1996 and expects to be in compliance through October 1, 1997.

     The 1995 debt amount represents a loan payable to a company affiliated with
a director of the Company which was scheduled to mature April 1998. This loan
was repaid with a portion of the proceeds from the $11.0 million borrowing under
the RFC Credit Facility.

     Weitzer at Deerfield Beach, Inc. Represents a $7.1 million borrowing under
the RFC Credit Facility of which $3.0 million is available as of September 30,
1996. This borrowing matures June 1998.

     Weitzer at Forest Lakes, Inc. Represents a $5.5 million borrowing under the
RFC Credit Facility of which $3.3 million is available as of September 30, 1996.
This borrowing matures February 1999.

     Weitzer Homebuilders Incorporated. Consists of (i) a $1.0 million borrowing
under the RFC Credit Facility for land acquisition which matures January 1997
and (ii) a $1.0 million working capital note under the RFC Credit Facility of
which approximately $600,000 is available as of September 30, 1996. The working
capital note is required to be maintained at a zero balance for a five day
period on a semi-annual basis.



                                      40
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The following are the scheduled maturities of acquisition, development and
construction loans payable as of September 30, 1996:

<TABLE>
                         <S>        <C>
                         1997       $       2,180,217

                         1998               4,111,916

                         1999              12,580,419

                         2000               4,291,955
                                      ----------------
                                    $      23,164,507
                                      ================
</TABLE>

     Debt Covenants. The RFC Credit Facility requires the Company to maintain a
minimum tangible net worth. The Company was not in compliance with this covenant
at September 30, 1996; however, on January 13, 1997 the lender waived the non-
compliance at September 30, 1996 and modified the covenant so that the Company
expects to be in compliance through December 30, 1997. The Weitzer Serena Lakes
loans require the Company to maintain minimum tangible net worth levels and
earning ratios. The Company was not in compliance with these covenants at
September 30, 1996; however, On January 13, 1997 the lender has waived 
compliance as of September 30, 1996 and modified the covenant so that the
Company expects to be in compliance through October 1, 1997. The Weitzer at
Harmony Lakes, Inc. revolving mortgage note requires the Company to maintain a
minimum tangible net worth. The Company was not in compliance with this
covenants at September 30, 1996; however, on January 13, 1997 the lender has
modified the covenant so that the Company was in compliance at September 30,
1996 and expects to be in compliance through October 1, 1997.



                                      41
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - NOTES AND LOANS PAYABLE

     Notes and loans payable consist of the following at September 30, 1996 and
1995:

<TABLE>
<CAPTION> 
                                              1996        1995
                                            --------    --------
<S>                                        <C>         <C>
Note payable to bank, bearing interest
at prime rate plus 1%, principal
payments of $4,000 due monthly with
interest through January 2000,
personally guaranteed by the Company's    
Chairman of the Board of Directors         $  160,000  $  208,000
 
Finance agreement payable for
insurance, bearing interest at 9.24%,
principal and interest payment of
$7,907 through January 1996 and $6,032           
through April 1996                             -           41,817
 
Note payable to bank, bearing interest
at 8.5%, principal and interest
payments of $1,673 due monthly through
June 1998, collateralized by certain         
office equipment                               33,305      49,785
 
Note payable to bank, bearing interest
at 8.0%, principal and interest
payments of $823 due monthly through
April 2000, collateralized by a vehicle        29,367     -
 
Capital lease payable with interest
imputed at 13.44%, payment of $8,857
due monthly through August 1998 with a
balloon payment of $29,024 due
September 1998, collateralized by           
certain model furnishings                     180,430     260,267
 
Capital lease payable with interest
imputed at 10.00%, payment of $908 due
monthly through September 1998,
collateralized by certain field              
equipment                                      14,084     -
                                            =========   =========
                                           $  417,186  $  559,869
                                            =========   =========
</TABLE>



                                      42
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The following are the scheduled maturities of notes and loans payable as of
September 30, 1996:
<TABLE>
<S>                                   <C>
                          1997        $         170,793
                          1998                  170,948
                          1999                   57,153
                          2000                   18,292
                                       ----------------
                                      $         417,186
                                       ================
</TABLE>

NOTE 5 - 10% BONDS PAYABLE

     Bonds payable, net of discount, consists of the following at September 30,
1996 and 1995:

<TABLE>
<CAPTION>
                                                1996          1995
                                           -------------  -------------
<S>                                        <C>            <C>
10% bonds with a scheduled maturity in                    
 June 1998; interest due quarterly           $3,750,000     $3,750,000
Original issue discount                        (378,350)      (594,550)
                                           -------------  -------------
                                             $3,371,650     $3,155,450
                                           =============  =============
</TABLE>

     On October 7, 1994, the Company completed a private placement of 75 Units
at $50,000 per Unit ( the "Private Placement"). Each Unit consisted of (i) a 10%
bond due June 30, 1998 in the principal amount of $50,000, and (ii) a warrant,
exercisable at a price of $.10 per share, to purchase such number of shares of
common stock of the Company as shall equal $37,500 in value. The Company
received net proceeds of $3,105,600 ($3,750,000 gross proceeds less $644,400 of
issuance costs) which were allocated, based on relative fair value, to the bonds
and the warrants in the amount of $2,939,250 and $810,750, respectively. The
original issue discount is being amortized over the term of the bonds and serves
to create an effective interest rate of 17.8%. The net proceeds were used by
Weitzer at Harmony Lakes, Inc., a subsidiary of the Company, to purchase and
develop the real property for the Weitzer at Harmony Lakes residential
community. The bonds are collateralized by the issued and outstanding capital
stock of Weitzer at Harmony Lakes, Inc.
     The principal amount of the bonds are due and payable in full upon the
receipt by the Company of at least $12,000,000 of gross proceeds from a public
or private sale of equity securities. As of September 30, 1996, the Company will
be required to repay the bonds upon additional sales of equity securities in
excess of approximately $815,000.
     The warrants issued in the Private Placement became exercisable in April
26, 1995 following the Company's initial public offering. These warrants were
exercised on July 21, 1995 and 432,663 shares of Class A Common Stock were
issued by the Company on such date.
     Under the terms of the bonds, the Company may not declare or pay any
dividend or make any other distribution on any equity securities of the Company
(except dividends or distributions payable in equity securities of the Company),
if, upon giving effect to such 



                                      43
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

dividend or distribution, the net worth of the Company would be reduced to less
than an amount equal to 120% of the remaining indebtedness outstanding under the
bonds.
 
NOTE 6 - 5% DEBENTURES

     During fiscal 1996, the Company issued a total of $1,970,000, 5%, two year
redeemable convertible debenture ("Debentures") resulting in net proceeds of
$1,743,000. The Debentures were convertible, commencing 45 days after issuance,
into shares of Class A Common Stock of the Company at the lesser of 10% below
the average closing bid price of the Class A Common Stock for the five days
immediately preceding the date of issuance or 21% below the average closing bid
price of the Class A Common Stock for the five business days immediately
preceding the date of conversion and are redeemable under certain circumstances.
As of September 30, 1996, the Company has converted a total of $785,000 of the
Debentures into 327,591 shares of the Company's Class A Common Stock. In August
1996, the Company notified outstanding Debenture holders that any and all
conversions into shares of the Company's Class A Common Stock have been
suspended indefinitely. As a result, two of the debenture holders brought suit
against the Company. Subsequent to September 30, 1996, the Company has redeemed
$900,000 of outstanding debentures for $1,010,000, including accrued interest.
Part of the payment was in settlement of the lawsuit previously discussed. As of
December 16, 1996, no further litigation has commenced by the remaining
debenture holder. During the fourth quarter of fiscal 1996, the Company recorded
a charge of $150,000 for the settlement of these debenture matters.


NOTE 7 - INCOME TAXES

     No income tax expense or benefit was recorded in fiscal 1996. The Company
recorded deferred income tax expense (benefit) of $37,000 and $(100,000) in
fiscal 1995 and 1994, respectively.



                                      44
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Net deferred taxes consist of the following components as of September 30,
1996 and 1995:

<TABLE>
<CAPTION> 
                                              1996              1995
                                              ----              ----
<S>                                     <C>                <C>
Deferred tax assets:
  Loss carryforwards                          $738,000           $63,000
  Accrued expenses                              56,000
  Non-deductible writedown of assets           395,000
  Non-deductible contributions                   4,400
  Less: valuation allowance                ($1,130,400)
                                        ----------------   ---------------
                                                63,000            63,000
                                        ----------------   ---------------
Deferred tax liabilities
                                        ----------------   ---------------
Net deferred tax asset (included in             
 other assets)                                  63,000            63,000
                                        ================   ===============
</TABLE>

     Reconciliation of the differences between income taxes (benefit) computed
at federal statutory tax rates and the Company's recorded provision (benefit)
for income taxes are as follows:
<TABLE>
 
                                           1996      1995      1994
                                           ----      ----      ----
<S>                                      <C>       <C>       <C>
Expected tax benefit at Federal           
 statutory rate                           (34.0)%    34.0%   (34.0)% 
State income tax (benefit), net            (3.6)%     3.6%    (3.6)%
Surtax exemption                                     (2.6)%
Valuation allowance                        37.6%
                                         --------  --------  -------
                                            0.0%     35.0%   (37.6)%
                                         ========  ========  =======
</TABLE>

     As of September 30, 1996, the Company had net operating losses of
$1,960,000 which have been offset by a valuation allowance. These carryforwards
will expire through the year 2011.
     During the year ended September 30, 1996, the Company recorded a valuation
allowance of $1,130,400 on the deferred tax assets to reduce the total to an
amount that management believes will ultimately be realized. SFAS No. 109
requires a valuation allowance be recorded against tax assets which are not
likely to be realized. Based upon past performance and the uncertain nature of
their ultimate realization, the Company established a valuation allowance
against these carryforward items and will be recognizing the benefits only as
reassessment demonstrates they are realizable.

NOTE 8 - BENEFIT PLANS

     In June 1994, a Performance Incentive Plan (the "Incentive Plan") was
adopted by the Company's Board of Directors and approved by its sole
shareholder. Pursuant to the Incentive Plan stock options, stock appreciation
rights ("SARs"), and restricted stock may be granted to eligible persons. The
Incentive Plan provides that, at any given time, the maximum number of shares of
common stock with respect to which stock options or SARs may be granted or which



                                      45
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

may be issued pursuant to restricted stock awards will be 125,000. At September
30, 1996, no stock options, SARs or restricted stock awards have been granted
pursuant to the Incentive Plan.
     In March 1995, the Company granted to the Company's Chairman of the Board
of Directors options to purchase 150,000 shares of Class A Common Stock
exercisable at $7.80 per share for a period of four years commencing April 26,
1996.



                                      46
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - INVESTMENTS IN AFFILIATED PARTNERSHIPS

     The following table presents summarized combined financial information for
the Weitzer Homebuilding Partnerships for the periods from October 1, 1994
through May 3, 1995 and for the year ended September 30, 1994.

<TABLE>
<CAPTION>  
                                    October 1,        Year Ended 
                                   1994 through      September 30, 
                                   May 3, 1995           1994
                                  --------------    --------------
<S>                              <C>               <C>
Revenues                         $    3,395,996    $   53,662,146
                                                 
Costs of homes sold                  (2,852,187)      (45,710,767)
                                                 
Selling and other expenses             (402,564)       (3,497,209)
                                  --------------    --------------
Net income                       $      141,245    $    4,454,170
                                  ==============    ============== 
</TABLE>

     In accordance with the partnership agreements, the income for each of the
Weitzer Homebuilding Partnerships was allocated to the general partners first to
provide a 10% preferred return on invested capital (which was principally
contributed by the Financial Partner) with the balance of the income shared
equally; all losses were shared equally.


NOTE 10- REVERSE STOCK SPLITS; INITIAL PUBLIC OFFERING, PURCHASE OF FINANCIAL
PARTNER'S INTERESTS, AND WARRANTS

     On December 28, 1994, the Company effected a 1 for 2.16922 reverse stock
split. On March 23, 1995, the Company effected a 1 for 1.383333 reverse stock
split. All shares and share amounts have been restated to reflect the December
28, 1994 and March 23, 1995 stock splits.
     On April 11, 1995, the Company's Articles of Incorporation were amended to
create two classes of common stock, $.01 par value - Class A Common Stock and
Class B Common Stock.  The Class A Common Stock and the Class B Common Stock
vote together as a single class and are entitled to one vote per share.
     Prior to the Company having earned an aggregate of $7.5 million of adjusted
operating income (as defined), the holders of common stock are entitled to
receive dividends, to the extent funds are legally available, at the rate of
$0.323 per share per annum for Class A Common Stock and $0.001 per share per
annum for Class B Common Stock, payable on a quarterly basis. In August 1996,
the Company elected to forego the regularly scheduled cash dividend payment on
its outstanding shares of Class A Common Stock.  Cash dividends on the Class A
Common Stock are cumulative, and accordingly, the amount of such dividends
accrues for the benefit of the Company's shareholders. As of September 30, 1996,
dividends in arrears amounted to $191,771.



                                      47
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     On April 26, 1995, The Company completed its initial public offering of
1,600,000 shares of Class A Common Stock at a price of $6.50 per share. The
Company realized $8,578,588 of net proceeds from the offering and used
$6,537,711 to acquire the Financial Partner's interests in the Weitzer
Homebuilding Partnerships.



                                      48
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The following unaudited consolidated pro forma financial information for
the year ended September 30, 1995 gives effect to the purchase of the Financial
Partner's interests in the Weitzer Homebuilding Partnerships with the net
proceeds of the Company's initial public offering of Class A Common Stock as if
the transactions had occurred on October 1, 1994:

<TABLE>
 
<S>                                       <C>
Revenues                                   $ 37,924,941
Costs of homes sold                          31,891,433
Selling and other expenses                    4,844,151
                                            -----------
Income before income taxes                    1,189,357
Provision for income taxes and charge
 in lieu of income taxes                        416,241
                                            -----------
Net income                                 $    773,116
                                            ===========
Net income per share                       $       0.24
                                            ===========
Weighted average number of shares             3,186,940
                                            ===========
</TABLE>
     In connection with its initial public offering, the Company sold to certain
lead underwriters , for nominal consideration, warrants to purchase from the
Company 160,000 shares of Class A Common Stock. The warrants are exercisable at
a price of $7.80 per share of Class A Common Stock through April 26, 2000. The
warrants also provide for adjustment in the number of shares of Class A Common
Stock issuable upon the exercise thereof as a result of certain subdivisions and
combinations of the Class A Common Stock. The warrants grant to the holders
thereof certain rights of registration for the securities issuable upon the
exercise of the warrants.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Performance Bonds

     In accordance with certain governmental requirements, the Company have
caused performance bonds and letters of credit aggregating $1,568,000, to be
issued for certain of the projects to provide for the completion of required
improvements as of September 30, 1996.

Litigation

     The Company is involved from time to time in litigation arising in the
ordinary course of its business, none of which is expected to have a material
adverse effect on the Company's consolidated financial position or results of
operations.

NOTE 12 - RISKS AND UNCERTAINTIES



                                      49
<PAGE>
 
              WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The Company, as well as the homebuilding industry in general, may be
adversely affected during periods of high inflation, primarily because of higher
land and construction costs. In addition, higher mortgage interest rates may
significantly affect the affordability of permanent mortgage financing to
prospective purchasers. Inflation also increases the Company's interest costs
and costs of labor and materials. The Company attempts to pass through to its
customers any increases in its costs through increased selling prices and, to
date, inflation has not had a material adverse effect on the Company's results
of operations. However, there is no assurance that inflation will not have a
material adverse impact on the Company's future results of operation. 
     The Company's operations are interest rate sensitive. Overall housing
demand is adversely affected by increase in interest costs. If mortgage interest
rate increase significantly, this may negatively impact the ability of a
homebuyer to secure adequate financing. Such results of higher interest rates
may result in adversely affecting the Company's revenues, gross margins and net
income.



                                      50
<PAGE>
 
ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE

None.

PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

  The information regarding the Company's directors and executive officers is
included in Part I under "Directors and Executive Officers of the Registrant."
 
  The Board of Directors of the Company held four meetings during its fiscal
year ended September 30, 1996 and each director attended such meeting of the
Board. The Board has an Audit Committee and Compensation Committee.

  The Audit Committee consists of Messrs. Hellring and Rose. The Audit Committee
oversees the procedures, scope and results of the annual audit and reviews the
services provided by the Company's independent public accountants.

  The Compensation Committee consists of Messrs. Hellring, Rose and Ambrosio,
none of whom are presently or formerly employees of the Company. The
Compensation Committee administers the Company's executive officers not fixed by
contract.

  Directors who are not employees and who do not otherwise receive compensation
from the Company are entitled to $2,000 per Board meeting attended in addition
to the reimbursement of reasonable expenses incurred in attending meetings.
Directors who are officers or employees of the Company receive no additional
compensation for service as directors, other than reimbursement of reasonable
expenses incurred in attending meetings. During the fiscal year ended September
30, 1996, the Company made no other payments to directors with respect to
participation on Board committees or with respect to special assignments.


ITEM 11.   EXECUTIVE COMPENSATION

  The following table sets forth certain summary information concerning all cash
and noncash compensation paid or accrued for services rendered to the Company
during the fiscal years ended September 30, 1995 and 1996 to the Company's Chief
Executive Officer and each of the Company's other most highly compensated
executive officers. All executive officers of the Company are currently
employees of an employee leasing company named National Business Solutions,
Inc., which has had an Agreement for Services with Weitzer Services Inc., a
subsidiary of the Company.



                                      51
<PAGE>
 
Summary Compensation Table

<TABLE> 
<CAPTION> 
                                                                                         Long Term
                                            Annual Compensation                          Compensation
---------------------------------------------------------------------------------------------------------------------------------
                                Fiscal                                 Other Annual                             All Other        
Name and Principal Position      Year       Salary ($)  Bonus ($)     Compensation($)    Option Award (#)   Compensation ($)(1)  
---------------------------      ----       ----------  ---------     ---------------    ----------------   ------------------- 
----------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>         <C>         <C>           <C>                <C>                <C>  
Harry Weitzer
Chairman of the Board and        1996        295,000      ---              ---                 ---                  ---
Chief Executive Officer          1995        236,667      ---              ---                 ---                  --- 
-----------------------------------------------------------------------------------------------------------------------------------
Estelle Burnside                 1996         96,539      ---              ---                 ---                  ---
Executive Vice President         1995         89,333      ---              ---                 ---                  --- 
-----------------------------------------------------------------------------------------------------------------------------------
James Rosewater                  1996         94,800      ---              ---                 ---                  ---
Vice President-Marketing         1995         23,000      ---              ---                 ---                  --- 
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE> 

   (1)   The amounts reflected in the above table do not include any amounts for
perquisites and other personal benefits extended to the named executive
officers. The aggregate amount of such compensation for the named executive
officer did not exceed 10% of the total annual salary and bonus of such
executive officer and, accordingly, has been omitted from the table as permitted
by the rules of the Securities and Exchange Commission.

Options Grants in Last Fiscal Year

  None

Aggregated Fiscal Year-End Option Value Table

--------------------------------------------------------------------------------
                                                    Value of Unexercisable      
               Number of Unexercised Options        In-the-Money Options at
Name            at September 30, 1996(#)            September 30, 1996($)(1)
--------------------------------------------------------------------------------
               Exercisable     Unexercisable        Exercisable    Unexercisable
--------------------------------------------------------------------------------
Harry Weitzer      ---            150,000               ---            --- 
--------------------------------------------------------------------------------

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

(1) The closing price for the Class A Common Stock as reported by the Nasdaq
        National Market System on September 30, 1996 was $1.75, which is less
        than the option exercise price at 1996 fiscal year end.

    Effective as of November 1, 1995, the Company entered into a five-year
employment agreement (the "Employment Agreement") with Harry Weitzer, its
Chairman, President and Chief Executive Officer, whereby he agreed to devote
substantially all of his business time to the affairs of the Company. The
Employment Agreement provides for a salary of $300,000, with annual cost of
living adjustments.



                                      52
<PAGE>
 
In addition, the Employment Agreement provides for bonuses, reimbursement of
business expenses, provision of an automobile, health insurance and related
benefits. The Employment Agreement provides that if Mr. Weitzer is terminated
other than for "cause" (which is defined as gross negligence in the performance
of his duties, fraud, embezzlement or breach of trust), dissolution of the
Company or his death, he will be entitled to receive the scheduled compensation
for the full remaining term of the Employment Agreement. Any bonuses or other
forms of compensation that Mr. Weitzer may receive in the future fiscal years
will be determined by the Compensation Committee of the Board of Directors based
on criteria established by the Committee.

Compensation Committee Report on Executive Compensation

   The Company's executive compensation for the fiscal year ended September 30,
1996 consisted of three primary components: base salary, bonus and grants of
stock options. Fiscal 1996 salary and bonus for the Company's executive officers
was determined and approved by the Company's Board of Directors prior to the
establishment of the Compensation Committee in June 1995 and the consummation of
the Company's initial public offering in April 1995. At the time that such
compensation was determined, Harry Weitzer was the sole member of the Board of
Directors.

   The components of the Company's Executive Compensation (salary, bonus
and stock options) are designed to facilitate fulfillment of the compensation
objectives of the Company's Board of Directors and Compensation Committee, which
objectives include (i) attracting and retaining competent management, (ii)
rewarding management for short and long term accomplishments, (iii) aligning the
interests of management with those of the Company's shareholders, and (iv)
relating management compensation to the achievement of Company goals and the
Company's performance.

   The Board's determination of fiscal 1996 salary and bonus for the
Company's executive officers (other than Harry Weitzer) was made after reviewing
and considering a number of factors, including job responsibility, level of
performance, achievement of Company goals, Company performance, compensation
levels at competitive companies and the Company's historical compensation
levels. Although Company performance was one of the factors considered, the
Board's compensation decisions were based upon an overall review of the relevant
factors and compensation was not tied to Company performance by any specific
relationship or formula.

   The determination of fiscal 1996 salary, bonus and stock options for
Harry Weitzer, the Chairman of the Board, President and Chief Executive Officer
of the Company, was based upon an employment agreement and a stock option
agreement between the Company and Mr. Weitzer. In negotiating the employment
agreement, the Company analyzed the compensation of chief executive officers of
public companies within the home building industry and public companies similar
in size to the Company. There was no specific relationship or formula by which
Mr. Weitzer's compensation was tied to Company performance. Mr. Weitzer received
options to purchase 150,000 shares of Class A Common Stock exercisable at $7.80
per share (based on an initial public offering price of $6.50 per share) for a
period of four years commencing April 20, 1996. These options were awarded in
recognition of Mr. Weitzer's efforts in furthering the Company's growth,
including completing the Company's initial public offering and acquiring the
affiliated partner's interests in the Weitzer Homebuilding Partnerships.

   To further the implementation of its compensation philosophy, the Board
of Directors adopted a stock option plan which is named the Performance
Incentive Plan in June 1994. During fiscal 1996, no awards were granted pursuant
to the Performance Incentive Plan.



                                      53
<PAGE>
 
   In June 1995, the Company established a Compensation Committee. The function
of the Compensation Committee is to determine the compensation of the Company's
executive officers, including bonuses, and to administer the Company's
Performance Incentive Plan.

Performance Graph

   The graph below compares the cumulative total returns, including the 
reinvestment of dividends, of the Class A Common Stock with the companies in the
Nasdaq Stock Market (U.S.) Index and with seven peer group companies which
include: Borror Corp., Engle Homes, Inc., Oriole Homes Corp., Rottlund Homes,
Inc., Sundance Homes, Inc., Washington Homes, Inc., and Zaring Homes, Inc. (the
"Peer Group"). The Peer Group consists of homebuilders who either (i)
concentrate their operations primarily within one geographical area of the
country and have a market capitalization of less than $50 million, or (ii)
concentrate their operations primarily in Florida and have a market
capitalization of less than $100 million. The comparison covers a period from
April 26, 1995 to September 30, 1996, and is based on an assumed $100 investment
on April 26, 1995 (the date of the initial public offering of the Class A Common
Stock) in the Nasdaq Stock Market (U.S.) Index, the Peer Group and in the Class
A Common Stock.

   
   
                COMPARISON OF 17 MONTH CUMULATIVE TOTAL RETURN*
  AMONG WEITZER HOMEBUILDERS INCORPORATED, THE NASDAQ STOCK MARKET-US INDEX 
                               AND A PEER GROUP

                           [LINE GRAPH APPEARS HERE]

                                        9/95             9/96

WEITZER HOMEBUILDERS INCORPORATED       101                33            
PEER GROUP                              112               117      
NASDAQ STOCK MARKET - US                128               152      


* $100 INVESTED ON 4/28/95 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF
  DIVIDENDS. FISCAL YEAR ENDING SEPTEMBER 30.


Graph produced by Research                      

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN
           BENEFICIAL OWNERS AND MANAGEMENT

   The following table sets forth as of December 16, 1996, the number and
percentage of outstanding shares of Common Stock owned beneficially by (i) each
shareholder known by the Company to own more than 5% of the outstanding shares
of Class A Common Stock or Class B Common Stock; (ii) each director and director
nominee of the Company; (iii) each executive officer named in the Summary
Compensation Table under "Executive Compensation" and (iv) all directors and
executive officers as a group.

<TABLE> 
<CAPTION> 

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

                                        Class A                                 Class B
------------------------------------------------------------------------------------------------------------------------------------

<S>                          <C>    
Name and Address (1)         Amount and Nature of       Percent                 Amount and Nature of            Percent 
of Beneficial Owner          Beneficial Ownership       of Class                Beneficial Ownership            of Class
------------------------------------------------------------------------------------------------------------------------------------

Harry Weitzer                         --                   --                   1,500,000                       100.0%
------------------------------------------------------------------------------------------------------------------------------------

Larry Hellring                      10,000                  *                       --                            -- 
------------------------------------------------------------------------------------------------------------------------------------

Joseph B. Rose                       5,000                  *                       --                            --
------------------------------------------------------------------------------------------------------------------------------------

Mike Ambrosio                         --                   --                       --                            -- 
------------------------------------------------------------------------------------------------------------------------------------

Ivan Fagger                           --                   --                       --                            -- 
------------------------------------------------------------------------------------------------------------------------------------

Estelle Burnside                      --                   --                       --                            -- 
------------------------------------------------------------------------------------------------------------------------------------

James Rosewater                       --                   --                       --                            -- 
------------------------------------------------------------------------------------------------------------------------------------

All directors and executive 
officers as a group   
(7 persons)                         15,000                  *                   1,500,000                       100.0%
------------------------------------------------------------------------------------------------------------------------------------

* Less than 1%.
</TABLE> 

(1) Address for all persons listed is c/o Weitzer Homebuilders Incorporated,
     5901 N.W. 151st Street, Suite 120,  Miami Lakes, Florida 33014.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Effective September 30, 1994, Harry Weitzer contributed all of the
outstanding capital stock of substantially all of the Company's subsidiaries
which were engaged in homebuilding activities at that time (the "Weitzer
Subsidiaries") to the Company in exchange for 1,500,000 shares of Class B Common
Stock. Prior to September 30, 1994, Mr. Weitzer was the sole shareholder of
these Weitzer Subsidiaries, certain of which are a general partner in the
Weitzer Homebuilding Partnerships and were organized as S-corporations under the
Code. 



                                      54
<PAGE>
 
As a result, the earnings of these entities had been taxed for federal
income tax purposes directly to Mr. Weitzer, rather than to the Weitzer
Subsidiaries.

   In connection with the acquisition, development and construction loan
agreements of the Weitzer Homebuilding Partnerships and other Company
subsidiaries, Harry Weitzer and his wife have executed personal guaranties of
payment and performance. At September 30, 1996, the total amount of such bank
indebtedness of the Weitzer Homebuilding Partnerships and of the other Company
subsidiaries guaranteed by Mr. Weitzer and his wife was approximately $2.5
million.

   Ivan Faggen, a director of the Company, is managing director of Triton
Pacific Capital LLC, which company recently entered into an agreement with the
Company for financial consulting services.


PART IV
-------

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT
          SCHEDULES AND REPORTS ON FORM 8-K

     (a)  The following documents are filed as a part of this report:

          1.   The following exhibits, including those incorporated by
               reference.

Exhibit
Number                Description
                  ------------------------------------------------------------

3.1**             Amended and Restated Articles of Incorporation of the Company

3.2*              By-Laws of the Company

4.1*              Form of 10% Bond

4.2*              Unit Construction Revolving Loan Agreement dated as of August
                  14, 1992, and Amendment dated November 30, 1993, between
                  Weitzer Chapel Trail Homes, Harry Weitzer, Trudy Weitzer and
                  Ohio Savings Bank, and related Consolidated Revolving Mortgage
                  Note

4.3*              First Mortgage and Security Agreement dated as of August 14,
                  1992, between Weitzer Chapel Trail Homes and Ohio Savings Bank
 
4.4*              Future Advance, Mortgage and Loan Modification Agreement dated
                  as of November 30, 1993, between Weitzer Chapel Trail Homes,
                  Harry Weitzer, Trudy Weitzer and Ohio Savings Bank, and
                  related Revolving Future Advance Mortgage Note
 
4.5***            Loan Agreement dated as of June 30, 1995, between the Company
                  and Residential Funding Corporation

4.6***            Construction Loan Agreement dated as of June 30, 1995, between
                  Weitzer at Deerfield Beach, Inc., and Residential Funding
                  Corporation and related Promissory Note and Guaranty of the
                  Company

4.7***            Construction Mortgage, Security Agreement and Fixture Filing
                  with Assignment of Rent Proceeds and Agreements dated as of
                  June 30, 1995, between Weitzer at Deerfield Beach, Inc., and
                  Residential Funding Corporation

4.8***            Loan Agreement dated as of August 3, 1995, between Weitzer
                  Serena Lakes Homes II, Inc., Weitzer Serena Lakes Townhomes,
                  Inc., and Barnett Bank of South Florida, N.A., and related
                  Promissory Notes and Guaranties of the Company and Harry and
                  Trudy Weitzer

4.9***            First Mortgage and Security Agreement dated as of August 3,
                  1995, between Weitzer Serena Lakes Homes II, Inc., Weitzer
                  Serena Lakes Townhomes, Inc., and Barnett Bank of South
                  Florida, N.A.





                                      55
<PAGE>
4.10*****         First Amendment Agreement dated as of January 24, 1996, by and
                  between the Company. Residential Funding Corporation and
                  Webster Grant Land Company.

4.11******        Construction Loan Agreement dated February 28, 1996, between
                  Weitzer Forest Lakes Villas, Inc. and Residential Funding
                  Corporation and related Promissory Note and Guaranty of the
                  Company

4.12******        Construction Mortgage, Security Agreement and Fixture Filing
                  with Assignment of Rents , Proceeds and Agreements dated as of
                  February 28, 1996 between Weitzer Forest Lakes Villas, Inc.
                  and Residential Funding Corporation

10.1*             Employment Agreement dated as of November 1, 1994, between the
                  Company and Harry Weitzer

10.2*             Indemnification Agreement dated as of September 30, 1994,
                  between the Company and Harry Weitzer

10.3*             Performance Incentive Plan

10.4*             Option Agreement for the Purchase of Common Stock dated as of
                  March 22, 1994 between the Company and Harry Weitzer

10.5*             Letter Agreement dated January 9, 1995, amoung the Company,
                  Harry Weitzer, Weitzer Pine Glenn Homes, Inc., Weitzer Serena
                  Lakes Homes II, Inc., Weitzer Serena Lakes Townhomes, Inc.,
                  and Barnett Bank of South Florida, N.A.
 
10.6*             Letter Agreement dated January 31, 1995, among the Company,
                  Harry Weitzer, Weitzer Chapel Trail Homes, Inc., and Ohio
                  Savings Bank

10.7*             Pledge Agreement dated as of October 25, 1994, between the
                  Company and Josephthal, as agent on behalf of the holders of
                  the 10% Bonds, of the stock of Weitzer at Harmony Lakes, Inc.
                  relating to the Company's October 1994 private placement
 
10.8*             Agreement dated as of January 30, 1992, between Broward
                  Management Company and Webster Grant Land Company, as amended

10.9***           Agreement for Purchase and Sale dated June 14, 1995, between
                  Dade Residential Developers, Inc. and Webster Grant Land
                  Company
 
10.10****         Agreement for Services dated as of November 30, 1995, between
                  the Company and National Business Soutions, Inc.
 
21.1****          Subsidiaries of the Company


*         Incorporated herein by reference to the exhibit bearing the same
          number and filed as a part of the Company's Registration Statement on
          Form S-1 filed on April 26, 1995 (File No. 33-89076).

 
**        Incorporated herein by reference to the exhibit filed as a part of the
          Company's report on Form 10-Q for the three months ended March 31,
          1995.

***       Incorporated herein by reference to the exhibit filed as a part of the
          Company's report on Form 10-Q for the three months ended June 30,
          1995.
 
****      Incorporated herein by reference to the exhibit filed as a part of the
          Company's report on Form 10-K for the fiscal year ended September 30,
          1995.
 
*****     Incorporated herein by reference to the exhibit filed as a part of the
          Company's report on Form 10-Q for the three months ended December 31,
          1995.
 
******    Incorporated herein by reference to the exhibit filed as a part of the
          Company's report on Form 10-Q for the three months ended March 31,
          1996.


(b)  Reports on Form 8-K:

          On April 8, 1996 the Company filed a report on Form 8-K during the
          quarter for which this report is being filed reporting various Other
          Events including the resiggnation of one of the Company's Board of
          Directors, the addition of two new board members and the issuance of
          certain debt instruments.

   



                                      56
<PAGE>
 
                                  SIGNATURES
                                  ----------

        Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, as of the 10th day of
January, 1997.

                                        WEITZER HOMEBUILDERS INCORPORATED

                                        By:
                                           ---------------------------------
                                           Harry Weitzer
                                           Chairman of the Board, and Chief
                                           Executive Officer (Principal
                                           Executive Officer)

        Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.


Signature                               Title                   Date
---------                               -----                   ----

/s/ Timothy S. Hart
-------------------------------------------------------
Timothy S. Hart                    Corporate Controller    January 10, 1997
                                   (Principal Financial
                                   and Accounting Officer)


/s/ Joseph B. Rose
-------------------------------------------------------
Joseph B. Rose                     Director                January 10, 1997



/s/ Larry Hellring
-------------------------------------------------------   
Larry Hellring                     Director                January 10, 1997
                                                                          
                                                                          
/s/ Michael Ambrosio                                                      
-------------------------------------------------------
Michael Ambrosio                   Director                January 10, 1997
                                                                          
                                                                          
/s/ Ivan Faggen                                                           
------------------------------------------------------- 
Ivan Faggen                        Director                January 10, 1997 



                                      57