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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ending December 31, 1994

OR

[ ]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 1-4719

THE DELTONA CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 59-0997584
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

3250 S.W. THIRD AVENUE
MIAMI, FLORIDA 33129
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (305) 854-1111

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $1 PAR VALUE
(Title of Class)

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 filers
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
amendments to this Form 10-K. [ ]

State the aggregate market value of the voting stock held by
non-affiliates of the Registrant: $1,676,210 based average of the
bid and asked prices of such stock as traded on the
over-the-counter on March 24, 1995. (Excludes shares of voting
stock held by directors, executive officers and beneficial owners
of more than 10% of the Registrant's voting stock; however, this
does not constitute an admission that any such holder is an
"affiliate" for any purpose.)

Indicate the number of shares outstanding of the
Registrant's classes of common stock, as of the latest
practicable date: 6,704,839 shares of common stock, $1 par
value, as of March 24, 1995.

DOCUMENTS INCORPORATED BY REFERENCE
Document Incorporated Part(s)
* Registrant's 1995 Annual Meeting
Proxy Statement to be filed with
the Securities and Exchange
Commission pursuant to Regulation 14A Part III


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THE DELTONA CORPORATION

INDEX




FORM 10-K SECTION HEADING IN PAGE
ITEM NO. ATTACHED MATERIAL NUMBER
__________ ---------------------------- -----


PART I
Items 1 and 2 .. Business.............................. 1
General............................... 1
Recent Developments................... 1
Business Segments..................... 4
Real Estate........................... 5
Other Businesses...................... 11
Employees............................. 11
Competition........................... 12
Regulation............................ 12
Item 3 ......... Legal Proceedings..................... 16
Item 4 ......... Not Applicable


PART II
Item 5 ......... Price Range of Common Stock and
Dividends............................ 18
Item 6 ......... Selected Consolidated Financial
Information.......................... 19
Item 7 ......... Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 20
Item 8 ......... Index to Consolidated Financial
Statements and Supplemental Data..... 35
Item 9 ......... Not Applicable


PART IV
Item 14 ........ Exhibits, Financial Statement Schedules
and Reports on Form 8-K.............. 61





ITEMS 1 AND 2

BUSINESS
GENERAL

The Company was founded in 1962 and is principally engaged
in the development and sale of Florida real estate, through the
development of planned communities on land acquired for that
purpose. The Company offers single-family lots and multi-family
and commercial tracts for sale, in communities designed by the
Company. The Company has developed nine planned communities in
Florida, six of which are completed and three are in various
stages of development, and range in size from 1,500 to over
17,000 acres with a combined estimated population in excess of
186,000. The Company plans, designs and develops roads,
waterways, recreational amenities, grading and drainage systems
within these communities. Since 1962, the Company has sold over
150,000 single-family lots and multi-family and commercial tracts
in its communities, in addition to over 13,000 single-family
homes and over 4,300 multi-family housing units.

The Company has substantial land holdings in Florida. Its
holdings include an inventory of over 19,400 unsold platted
single-family lots and multi-family and commercial tracts.
(Platting is the process of recording, in the public records of
the county where the land is located, a map or survey delineating
the legal boundaries of the lots and tracts.) See "Real Estate:
Land".

The Company also operates other businesses related to its
real estate activities, such as a title insurance company and a
real estate brokerage company. In addition, the Company has
designed and constructed country clubs, golf courses and other
recreational amenities at its communities, and operates such
amenities until their conveyance or sale.

Historically, the Company has designed, constructed and
operated utility systems for the distribution of water and LP gas
and for the collection and treatment of sewage, primarily at the
Company's communities. However, on June 6, 1989, Topeka Group
Incorporated ("Topeka"), a subsidiary of Minnesota Power & Light
Company ("MPL"), exchanged the Company's Preferred Stock which it
acquired in November, 1985 for the Company's utility
subsidiaries.

The Company is incorporated in Delaware and has its
principal executive offices at 3250 S.W. Third Avenue, Miami,
Florida 33129. Its telephone number is (305) 854-1111. The
Company, as used herein, refers to The Deltona Corporation and,
unless the context otherwise indicates, its wholly-owned
subsidiaries.

RECENT DEVELOPMENTS

Although the Company has experienced severe liquidity
problems since 1990, the Company was able to stabilize its
situation somewhat in 1992 when it completed a $13,500,000 sale
of contracts receivable and a transaction with Selex, described
below, which resulted in the infusion of additional funds into
the Company and in a change in control of the Company.

In June 1992, Selex International B.V., a Netherlands
Corporation ("Selex") loaned the Company $3,000,000
collateralized by a first mortgage on certain of the Company's
property in its St. Augustine Shores, Florida community ("the
First Selex Loan") and acquired from Empire of Carolina, Inc.
("Empire") 2,220,066 shares of the Company's Common Stock held by
Empire, as well as the $1,000,000 Loan which Empire previously
made the Company (with interest accrued thereon of approximately
$225,000). As part of the Selex transaction, Selex was granted
an option, which, as modified, enabled Selex to convert the First
Selex Loan, or any portion thereof, into a maximum of 600,000
shares of the Company's Common Stock at a per share conversion
price equal to the greater of (i) $1.25 or (ii) 95% of the market
price of the Company's Common Stock at the time of conversion,
but in no event greater than $4.50 per share (the "Option"). On
February 17, 1994, Selex exercised the Option, in full, at

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a conversion price of $1.90 per share, such that $1,140,000 in
principal was repaid under the First Selex Loan through such
conversion, and Selex held an aggregate of 2,820,066 shares of
the Company's Common Stock (42.06% of the outstanding shares of
Common Stock of the Company, based upon the number of shares of
the Company's Common Stock outstanding as of March 24, 1995).

In December, 1992, Mr. Gram, the beneficial owner of the
Common Stock of the Company held by Selex, acquired all of the
Company's outstanding bank debt and then assigned same to Yasawa
Holdings N.V., a Netherlands Antilles Corporation ("Yasawa").
Yasawa simultaneously completed a series of transactions with the
Company which involved the transfer of certain assets to Yasawa
or its affiliated companies, the acquisition by Yasawa of 289,637
shares of the Company's Common Stock through the exercise of
warrants previously held by the banks, the provision of a
$1,500,000 line of credit to the Company and the restructuring of
the remaining debt as a $5,106,000 loan from Yasawa ("the Yasawa
Loan").

The Company began 1993 with the objective of securing the
financing necessary to effectively implement its marketing
program and achieve the objectives of its business plan so that
the Company could continue as a going concern. The business plan
was designed to significantly increase the Company's sales
through a major marketing effort so that future working capital
could be obtained by selling or otherwise financing newly
generated contracts and mortgages receivable. During 1993, the
Company was dependent on loans and advances from Selex, Yasawa
and their affiliates in order to implement its marketing program
and assist in meeting its working capital requirements. On April
30, 1993, Selex loaned the Company an additional amount of
$1,000,000 ("the second Selex loan") and since July 1, 1993 made
further loans to the Company aggregating $4,400,000 ("the third
Selex loan"). Funds advanced under the third Selex loan enabled
the Company to commence implementation of its marketing plan in
the third quarter of 1993. The full benefits of the program were
not realized in 1993 and the Company was unable to secure
financing in 1994 to meet its ongoing working capital
requirements.

While Selex, Yasawa and their affiliates provided the
Company with certain limited funds in 1994, such funds were not
sufficient to meet the Company's obligations or support its
marketing program. Additionally, on March 10, 1994, the Company
was advised that Selex filed Amendment No. 2 dated February 17,
1994 to its Schedule 13D ("the Amendment") with the Securities
and Exchange Commission ("the Commission"). In the amendment,
Selex reported that it, together with Yasawa and their
affiliates, were uncertain as to whether they would provide any
further funds to the Company. The amendment further stated that
Selex, Yasawa and their affiliates were seeking third parties to
provide financing for the Company and that as part of any such
transaction, they would be willing to sell or restructure all or
a portion of their loans and Common Stock in the Company.

Since March, 1994, the Company together with Selex, Yasawa
and their affiliates, have engaged in discussions with third
parties to provide funds to the Company through loans, equity
investments or asset acquisitions. None of such discussions has
resulted in an agreement or commitment by any party. In the
interim, the Company's liquidity position further deteriorated,
causing the Company to default on certain obligations, including
its escrow obligations to the State of Florida, Department of
Business and Professional Regulation, Division of Land Sales,
Condominiums and Mobile Homes ("the Division") pursuant to the
Company's 1992 Consent Order, its obligation under its lease for
its corporate offices and its obligation to make required
principal and interest payments under loans from Selex, Yasawa
and their affiliates. Furthermore, the Company has not paid
certain real estate taxes which aggregate approximately
$2,676,000 as of December 31, 1994 and is subject to certain
pending litigation claims which could further adversely affect
the financial condition of the Company. To address its severe
lack of working capital, the Company has drastically reduced the
scope of its operations, which, among other things, required the
Company to reduce its staffing levels by over 78% since December
31, 1993. See "Regulation - Other Obligations", "Legal
Proceedings", "Management's Discussion and Analysis of Financial
Condition and Results of Operations", and Notes 1, 5 and 8 to
Consolidated Financial Statements.

On April 6, 1994, both the New York and Pacific Stock
Exchanges suspended the Company's Common Stock from trading and
instituted procedures to delist the Company's Common Stock. On
June 16, 1994, the Company's
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Common Stock was formally removed from listing and registration
on the New York Stock Exchange. As of December 31, 1994, the
Company's Common Stock was traded on a limited basis in the
over-the-counter markets.

On July 13, 1994, Antony Gram was appointed Chairman of the
Board and Chief Executive Officer of the Company. As Chairman
and Chief Executive Officer, Mr. Gram was given the
responsibility of resolving the financial and legal difficulties
facing the Company and developing an alternative business plan to
enable the Company to continue as a going concern. Mr. Gram, who
had served as a director of the Company and Vice Chairman of the
Board from June, 1992 through April 6, 1994, holds a controlling
interest in Yasawa and Wilbury International N.V., a Netherlands
Antilles Corporation ("Wilbury"), which holds all of the issued
and outstanding capital stock of Selex. As a consequence, Mr.
Gram is deemed to be the beneficial owner of 3,109,703 shares of
Common Stock of the Company (46.38% of the outstanding shares of
Common Stock of the Company, based upon the number of shares of
the Company's Common Stock outstanding as of March 24, 1995).

The above-described appointment of Mr. Gram as Chairman and
Chief Executive Officer of the Company represents a further
attempt by the Board of Directors to address the Company's
financial difficulties. In conjunction with Mr. Gram's
appointment, he has loaned funds to the Company to pay certain
essential expenses
and effectuate certain settlements with the Company's principal
creditors. Yasawa has, as of December 31, 1994, advanced an
aggregate amount of $2,122,000 to the Company ("the Second Yasawa
loan") at an interest rate of 8% per annum. In addition, Mr.
Gram posted a $500,000 Letter of Credit to provide assurance for
a future payment pursuant to a settlement agreement with the
Company's landlord at its corporate headquarters in Miami.

During 1994, the Company has been successful in settling
certain lawsuits, including the lawsuit involving the lease for
the Company's corporate office; reducing its occupancy costs from
in excess of $1 million per annum to approximately $90,000 per
annum and reducing trade creditor obligations from approximately
$1,100,000 to $137,000 as of December 31, 1994. Additionally, in
an effort to reduce the Company's development obligation, the
Company has been successful in exchanging purchasers with
undeveloped lots to developed lots, negotiating for the sale of
its undeveloped second golf course in Citrus Springs with a
transfer of approximately $1.6 million in development obligation
to the Buyer, and negotiating with Citrus County a final
improvement and maintenance agreement to eliminate its remaining
development obligation at the Citrus Springs subdivision. In
addition, general
administrative expenses were reduced from $3,790,000 for the year
ending December 31, 1993 to $2,984,000 for the year ending
December 31, 1994.

In March 1995, the Company approved a Purchase and Sale
Agreement with Conquistador Development Corporation ("Second
Conquistador Acquisition") for the sale of an administration
building and multi-family site in the Company's St. Augustine
Shores community as well as the remaining lot inventory in the
Company's Feather Nest community at Marion Oaks in consideration
for the satisfaction of $2,599,300 of principal and accrued
interest on the Second and Third Selex Loans. The amount of debt
reduction is equivalent to the amount of Mr. Marcel Muyres'
participation in those loans as of January 31, 1995. In a
separate transaction, Conquistador Development Corporation and
the Company approved a Purchase and Sale Agreement ("Third
Conquistador Acquisition") for the sale of four single family
residential lots in the St. Augustine Shores community for
$100,000 in cash. The Second and Third Conquistador Acquisitions
are anticipated to close by April 30, 1995.

During the first quarter of 1995, the Company initiated a
new land sales program, which utilizes a limited group of
independent dealers. During March 1995, the Company reached a
lot sales volume of over $800,000, an encouraging first step in
its new land sales program.

Efforts are continuing to seek third parties to provide
funds to the Company, to reach reasonable settlements with the
Company's principal creditors and to develop a new business plan
for the Company to continue as a going concern. There can be no
assurance, however, that any of these efforts will be successful,
that additional financing will be obtained, that reasonable
settlements will be effected with the Company's principal
creditors, or that a new business plan will be developed and
successfully implemented.
Consequently, there can be no assurance that the

3




Company can continue as a going concern. In the event that these
matters are not successfully addressed, the Company's Board of
Directors will consider other appropriate action given the
severity of the Company's liquidity position, including, but not
limited to, filing for protection under the federal bankruptcy
laws. See "Legal Proceedings", "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
Notes 1, 5 and 8 to Consolidated Financial Statements.


BUSINESS SEGMENTS

The following table sets forth the total amounts of revenues
and operating profits (losses) from continuing operations
attributable to each of the Company's business segments for the
years ended as indicated. See Note 11 to Consolidated Financial
Statements:



YEARS ENDED
_________________________________________________________________________
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 1994 31, 1993 25, 1992 27, 1991 28, 1994
--------- -------- -------- -------- --------
(IN THOUSANDS)

REVENUES
Real estate:
Net land sales(a).......$ 2,058 $ 2,432 $ 2,092 $ 1,154 $ 11,612
Housing revenues........ 2,543 344 -0- 120 1,919
Improvement revenues(b). 1,214 4,725 2,404 -0- 2,152
Interest income(c)...... 1,046 1,197 3,584 5,270 8,236
Other................... -0- 67 -0- -0- -0-
------- -------- -------- -------- --------
Total real estate.... 6,861 8,765 8,080 6,544 23,919

Other(d).................. 1,832 3,447 4,372 4,510 5,436
Intersegment sales(e)..... (152) (113) (235) (270) (322)
------- -------- -------- -------- --------
Total................$ 8,541 $ 12,099 $ 12,217 $ 10,784 $ 29,033
======= ======== ======== ======== ========
OPERATING PROFITS (LOSSES)
Real estate...............$ 1,055 $ (3,073)$ 1,486 $ (6,750)$ (798)
Other (d)................. 1,033 279 2,209 1,928 1,789
General corporate expense. (4,147) (4,721) (7,057) (7,811) (10,602)
Interest expense.......... (1,847) (1,257) (3,356) (6,896) (7,397)
------- -------- -------- -------- --------
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS..$(3,906) $ (8,772)$ (6,718)$(19,529)$(17,008)
======= ======== ======== ======== ========

________________

(a) Net land sales consist of gross land sales less estimated uncollectible
installment sales and contract valuation discount and, prior to 1991,
deferred revenue (see Notes 1, 2 and 7 to Consolidated Financial Statements).

(b) Improvement revenues consist of revenue recognized due to completion of
improvements on prior period sales and exchanges from undeveloped to developed
lots.

(c) Interest income primarily consists of interest earned on contracts and
mortgages receivable and on temporary cash investments and the amortization of
valuation discounts.

(d) Other consists of revenues from sales other than real estate, the major
portion of which came from the country club operations in prior years. In
1994, the major portion consists of a gain of $1,051,000 from the termination of
its office lease on its Miami corporate headquarters.

(e) Intersegment sales consist primarily of sales between the Company and
its title insurance subsidiary.



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REAL ESTATE

The Company's principal business segment has primarily
involved the development and marketing of planned communities in
Florida since 1962. The following table sets forth certain
information about these communities and other land assets of the
Company as of December 31, 1994. For a detailed description of
these communities, see "Existing Communities" and "Other
Properties".



EXISTING COMMUNITIES
UN-
IMPROVED IMPROVED
PLATTED UNSOLD UNSOLD UN-
ESTI- LOTS & PLATTED PLATTED PLAT
ACREAGE INITIAL MATED TRACTS LOTS & LOTS & -TED
IN ACQUIS- CURRENT IN MAS- TRACTS TRACTS PLAT
MASTER- TION YEAR POPULA- TERPLAN (A)(B) (A)(B) ACR-
PLAN YEAR OPEN TION (A) EAGE
---------- ------ ----- ------- -------- ------- -------- ----
-

* Deltona Lakes. 17,203 1962 1962 63,000 34,964 - 6 -
* Marco Island(c). 7,844 1964 1965 34,000 8,657 - 1 -
* Spring Hill(d).. 17,240 1966 1967 67,000 32,909 - 6 -
* Citrus Springs
(e),(f),(g).... 15,954 1969 1970 6,200 33,783 - 61(f)(i) 2
St. Augustine
Shores ........ 1,985 1969 1970 7,000 3,130 883 8(i) 16
Sunny Hills..... 17,743 1968 1971 1,300 26,251 12,325 815(i) -
* Pine Ridge...... 9,994 1969 1972 2,250 4,833 - 10(i) -
Marion Oaks(e).. 14,644 1969 1973 7,500 27,537 4,223 1,085(i) -
* Seminole Woods.. 1,554 1969 1979 370 262 - - -

JOINT VENTURE
COMMUNITY:

* Tierra Verde.... 666 1976 1977 4,000 1,036 - - -
------- ------- ------- ------ ------- --
Total.............104,827 186,320 173,362 17,431(f) 1,992(f) 18



OTHER PROPERTIES

INITIAL
ACQUISITION
YEAR ACRES
------------ -------

Other Land Assets:
Other land adjacent to existing communities(h)...... Various 92
---
Total......................................... 92
===



__________________

* Development completed.

(a) Excluded from these lots and tracts are approximately 117 improved and
94 unimproved lots and tracts that are required for drainage and cannot be sold,
and approximately 146 improved and 354 unimproved lots and tracts that have been
removed from sale for encumbrances or additional site development, which can
only be sold when these issues are resolved. Also excluded are amenities
consisting of 3 administration facility sites, 2 recreational facility sites and
2 unimproved golf course sites, as well as approximately 463 tracts reserved for
community usage such as for greenbelts, buffer areas, church and school sites.

(b) "Unimproved Unsold Platted Lots & Tracts" and "Improved Unsold Platted
Lots & Tracts", when added to lots and tracts sold, as described in "Existing
Communities", may not equal "Platted Lots & Tracts in Masterplan" for various
reasons, such as the subdivision of tracts into two or more parcels for
sale to different purchasers.

(c) Excludes permit denial areas.

(d) Includes the South Hernando U.S. # 19 Commerce Center.

(e) Excluded 84 Citrus Springs and 65 Marion Oaks improved lots deeded to a
purchaser of the Company's
contracts receivable as exchange inventory to be available for customers who
pre-pay their contracts prior to the installation of water service lines within
one mile of their homesite and who wish to commence immediate construction.
Unused exchanged inventory will be reconveyed to the Company when
all purchased receivables have matured and are paid in full.

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(f) Excludes 850 improved and 844 unimproved platted lots and tracts held
for retail sale by Citony Development Corporation ("Citony"), an affiliate of
Yasawa. Also excludes 272 improved and 76 unimproved platted lots and tracts
owned by Citony that may be subject to certain adverse soil conditions and/or
drainage conditions that render the subject properties unuseable for retail
sales purposes. The property acquired by Citony in December 1992 was marketed
by the Company during 1993 and early 1994 pursuant to a joint venture agreement
between the Company and Citony. The Company and Citony agreed to terminate
the joint venture agreement in April 1994; however, the Company is providing
certain assistance to Citony during the transition period.


(g) Excludes 17 improved lots held by SunBank/Miami, N.A., as Trustee for
the Marco Shores Trust.

(h) Excludes 18 unplatted acres in existing communities and 3,829 acres of
unplatted natural preserves restricted for recreational park use which cannot
be sold.

(i) Included are improved lots deeded to a collateral trustee on behalf of a
purchaser of the Company's contract receivables; excluded is 1 lot in St.
Augustine Shores, 3 lots in Pine Ridge, 247 lots in
Citrus Springs and 277 lots in Marion Oaks, which are presently owned by a
purchaser of the Company's contract receivables and which are, pursuant to the
contract with such purchaser, to be deemed to the collateral trustee on
behalf of said purchaser so they may be sold by the Company to
create additional collateral.




LAND

In selecting sites for its communities, the Company examined
various demographic and economic factors, the regulatory climate,
the availability of governmental services and medical,
educational and commercial facilities, and estimated development
costs. Its communities are accessible to major highways and
Florida's major metropolitan areas and are near at least one
large body of water that can be used for recreational purposes.
Other criteria used by the Company in site selection are the
suitability of the land for natural or engineered drainage and
the availability of a sufficient supply of potable water to
support the community's anticipated population.

The master plans of the Company's communities have been
designed to provide for amenities such as golf courses, greenbelt
areas, parks and recreational areas, as well as for the basic
infrastructure, such as roads and water, and in selected
development areas, sewer lines. Sites are set aside for shopping
centers, schools, houses of worship, medical centers and public
facilities such as libraries and fire stations.

In its major planned communities, the Company offers for
sale lot and house "packages" situated on paved streets. In
other areas of these communities, the Company historically has
sold single-family lots and multi-family and commercial tracts on
an installment basis. Prior to 1991, the Company sold such land,
subject to a future development obligation, accepting down
payments as low as 5% of the sales price, with the balance
payable over periods ranging from 2 to 15 years, depending on the
payment plan selected. When the applicable rescission period
expired and the Company received at least 10% of the contracted
sales price, a substantial portion of the revenue and related
profit on the sale was recognized, with the remaining revenue and
profit deferred and recognized as land improvements such as
street paving occurred.

Due to various factors, since 1986, the Company had utilized
a deed and mortgage format for effecting sales in certain
communities upon receipt of a down payment equal to at least 25%
of the sales price. Beginning September 29, 1990, the Company
changed its method of recognizing land sales by recording the
sale of lots, subject to a future development obligation, under
the deposit method; since January 1, 1991, no sale has been
recognized until the Company receives at least 20% of the
contracted sales price; and beginning in the fourth quarter of
1991, the Company limited the sale of lots to those which front
on a paved street and are ready for immediate building. See Note
1 to Consolidated Financial Statements.

A portion of the contract purchase price is discounted and
treated as interest income to be amortized over the life of the
contract. Interest income is also earned in accordance with the
interest rate stated in the installment land sales contract. The
Company further provides an allowance for contract cancellations
based on the historical experience of the Company for such
cancellations.

6



Substantially all of the Company's single-family lot and
multi-family and commercial tract sales have been made on an
installment basis. Of the over 150,000 lots and tracts sold
since the Company's inception, contracts receivable presently
exist with respect to approximately 879 lots and tracts with an
outstanding balance of approximately $7,830,000 at December 31,
1994, excluding contracts receivable of which the Company is a
guarantor. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 2 to
Consolidated Financial Statements.


HOUSING

Historically, the Company has been involved in the design,
construction and marketing of single-family homes and
multi-family housing, including both condominium apartment
complexes and a vacation ownership (timesharing) project. Since
commencing operations, the Company has constructed and sold over
13,000 single-family homes and over 4,300 multi-family housing
units in its communities, with much of the actual construction
performed by subcontractors. Revenues, as well as related costs
and expenses, from single-family home and vacation ownership
sales are recorded at the time of closing.

SINGLE-FAMILY HOUSING

Although the Company had discontinued its single-family
housing activities at the end of 1984, in December, 1992, the
Company re-entered the single-family housing business at its
Marion Oaks community. Two and three bedroom moderately-priced
homes are being constructed by an exclusive independent builder
at the Company's FeatherNest housing village in this community
and sold in the local markets and through the Company's
independent dealer network. These homes include, as standard
features, cathedral ceilings, attached garages, lanais, breakfast
nooks and spacious walk-in closets. The housing village is
planned to feature its own recreational complex, including a
swimming pool, tennis courts and other amenities. The Company
also offers the same model line in Marion Oaks outside of the
FeatherNest village in a suburban program as well as build on
your own lot program for those purchasers who have previously
acquired a lot. During the third quarter of 1993, the Company
introduced its "House of the Year," a two-bedroom home, currently
priced from as low as $49,800 on the purchaser's already-owned
lot. The Company approved an Agreement of Purchase and Sale with
Conquistador Development Corporation for the sale of the
remaining lot inventory in FeatherNest in consideration for the
satisfaction of $2,599,300 in debt. Other housing programs are
unaffected by this transaction. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations".

MULTI-FAMILY HOUSING

The Company has designed, constructed and sold more than
4,300 condominium apartment units at its communities in buildings
ranging from garden-style apartment complexes to luxury high-rise
towers. Every condominium complex constructed by the Company
includes at least one pool and patio area; many feature tennis
courts and other recreational amenities.

Substantially all of the Company's remaining inventory in
its vacation ownership complex, The Surf Club, located on the
Gulf of Mexico at Marco Island, was sold in 1990.


MARKETING

The Company has historically sold land and housing products
on a national and international basis through independent dealers
in the United States, Canada and overseas, as well as through
Company-affiliated salespeople.


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For the year ended December 31, 1994, sales by independent
dealers in the United States accounted for approximately 16.4%
(in dollar volume) of new land sales contracts; while overseas
dealers accounted for approximately 14.9% of such contracts; and
Company-affiliated salespeople accounted for approximately 68.7%
of such contracts.


The financing and debt restructuring completed in 1992 and
the first half of 1993 enabled the Company to commence
implementation of its 1993 business plan by undertaking a new
marketing program which provided for the strengthening of the
Company's marketing organization, the rebuilding of its retail
land sales business and its re-entry into the single-family home
business. During 1993, the Company concentrated on bolstering
and expanding its existing network of independent dealers,
particularly in the northeastern and midwestern regions of the
United States, and during the latter part of the year, overseas.
The Company also established a Company-affiliated sales office in
Chicago during the second half of 1993.

The marketing program initiated in 1993 did not produce the
level of sales necessary in order that the Company's future
working capital requirements could be obtained through the sale
of newly generated contracts and mortgages receivables. Selex,
Yasawa and their affiliates, upon whom the Company had been
dependent to meet its working capital needs since December, 1992,
concluded that they would not provide any further funds to the
Company to be utilized in such marketing program. Consequently,
the Company severely curtailed its marketing program in 1994.
During the first quarter of 1995, the Company initiated a new
land sales program, which utilizes a limited group of independent
dealers. During March 1995, the Company reached a lot sales
volume of over $800,000.

EXISTING COMMUNITIES

DELTONA LAKES

Deltona Lakes is located 26 miles northeast of Orlando, with
its popular tourist attractions of Disney World and Sea World,
and is bordered on the northwest by Interstate 4. Opened in 1962,
Deltona Lakes now has a population of approximately 63,000. Over
30,000 lots and tracts and over 4,500 single and multi-family
housing units have been sold at this community.

Recreational amenities constructed by the Company include
tennis courts, a golf course and country club (which were sold in
1983), and a recreational complex on the shores of Lake Monroe.
A 133-room motel, an industrial park, a medical complex, several
shopping centers, numerous houses of worship, a fire station, a
public library and a junior high school are located in the
community. The Company has virtually completed development of
this community.

MARCO ISLAND

The Company's resort community of Marco Island is located
104 miles west of Miami and approximately 17 miles south of
Naples, Florida. Over 8,500 lots and tracts and over 4,200
single and multi-family housing units have been sold in this
community.

More than 10,000 persons reside at Marco Island year-round,
with the population more than tripling during the winter season.
It is the largest of Florida's Ten Thousand Islands and is known
for its recreational amenities which, in addition to its 3 1/2
mile white sand beach, sport fishing, sailing and shelling,
include golf, tennis, swimming and other recreational activities.
The island community has several major shopping centers, banks
and savings & loan associations, and medical and professional
centers.


8


Since the community's opening in January, 1965, the Company
has built and operated a yacht club and marina, the Marco Beach
Hotel & Villas, and a golf course and country club, all of which
have been sold. The Company has also constructed over 3,300
condominium units and The Surf Club, a 44 unit vacation ownership
complex, on the island. In 1990, the Company completed the sale
of substantially all of its remaining vacation ownership weeks.

Since its inventory at Marco Island is virtually sold out,
1995 revenues are expected to be generated from collections on
existing contracts receivable.

The community's planned growth was interrupted in 1976 by
denial of certain federal permits needed to complete the
development of approximately 14,500 units. The Settlement
Agreement between the Company, the State of Florida and various
environmental interest groups (the "Settlement Agreement") which
became effective on March 14, 1985, allowed for the potential
development of additional dwelling units at Marco Island, Horr's
Island and Marco Shores, located two miles from Marco Island.
The bulk of these properties have subsequently been sold or
transferred to the Company's lenders or to the trustee pursuant
to the 1992 settlement of the class action litigation. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources" and Note
9 to Consolidated Financial Statements.

SPRING HILL

Spring Hill, with an estimated population of approximately
60,700, is located 45 miles north of Tampa-St. Petersburg. Over
32,000 lots and tracts and over 4,000 single-family homes have
been sold in this community. The Company has constructed a
recreation complex, a country club, and two golf courses. The
Company has sold its country club and golf courses. Several
shopping centers and medical centers, two elementary schools, a
junior high school, a senior high school, numerous houses of
worship and two fire stations are located in the community. The
Company has completed the development of this community.

CITRUS SPRINGS

Citrus Springs, with an estimated population of 6,200, is
located 28 miles southwest of Ocala and 25 miles from the Gulf of
Mexico. Over 30,000 lots and tracts and over 700 single-family
homes have been sold at this community. A golf course and a
clubhouse (sold in 1990) and a community center have been
completed by the Company. Several churches and a convenience
shopping area are located in the community. The Company has
completed 400 miles of road. In 1992, most of the Company's
remaining inventory at this community was sold to Citony for
approximately $6,500,000. The Company and Citony then entered
into a joint venture agreement with respect to the property,
providing for the Company to market the property and receive an
administration fee from the venture. The Company and Citony
terminated the joint venture agreement in April 1994; however,
the Company is providing certain assistance to Citony during the
transition period. The Company is negotiating with a third party
for the purchase and sale of the second Citrus Springs Golf
Course, which is undeveloped. The Purchase and Sale agreement
contemplates the completion of the course by the buyer by
December 31, 1996. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations".

ST. AUGUSTINE SHORES

St. Augustine Shores, with a population estimated to be
approximately 7,000, is located seven miles south of St.
Augustine, between the Intracoastal Waterway and U.S. Highway 1.
Only commercial and multi-family tracts, house and lot packages
and condominium apartment units had been sold in this community
before 1987, but that year St. Augustine Shores was opened for
the retail sale of single-family lots. Approximately 1,000
additional single-family lots became available during 1988
through the platting of 641 acres adjacent to the existing
platted properties. Over 2,000 single and multi-family housing
units and lots and tracts have been sold.

9



The Company has completed 28 miles of road. Certain common areas
of the community, such as parks and swale areas, are maintained
by the St. Augustine Shores Service Corporation, a non-profit
corporation, of which all property owners are members. A golf
course and country club and a recreation building have been
completed by the Company. Several houses of worship and shopping
facilities are also located in the community. In October 1991,
the country club and golf course was transferred to the Company's
lenders. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital
Resources" and Note 5 to Consolidated Financial Statements.

Pursuant to the June, 1992 transaction with Selex, the
Company purchased certain multi-family and commercial property at
this community from Mr. Muyres and entities affiliated with
Messrs. Muyres and Zwaans. Also in conjunction with the June,
1992 transaction, an affiliate of Selex was granted an option to
repurchase certain of the property for $312,000, which option was
exercised by the affiliate in March, 1994. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations". Retail land sales will not resume at the community
until certain improvements are completed, as the Company is
selling only fully improved lots. See also "Regulation -
Community Development and Environmental".

The Company approved a Purchase and Sale Agreement with
Conquistador Development Corporation ("Second Conquistador
Acquisition") for the sale of an administration building and
multi-family site in the Company's St. Augustine Shores
community, as well as other property, in consideration for the
satisfaction of $2,599,300 of principal and accrued interest on
the Second and Third Selex Loans. In a separate transaction,
Conquistador Development Corporation and the Company approved a
Purchase and Sale Agreement ("Third Conquistador Acquisition")
for the sale of four single family residential lots in the St.
Augustine Shores community for $100,000 in cash. The Second and
Third Conquistador Acquisitions are anticipated to close by April
30, 1995.

SUNNY HILLS

Sunny Hills, with a population of approximately 1,300
residents, is located in the Florida Panhandle, 45 miles north of
the Gulf of Mexico and 35 miles north of Panama City. Over
12,000 lots and tracts and 300 single-family homes have been sold
at this community. It includes several houses of worship and a
convenience shopping center. The Company has completed or under
construction 165 miles of road. The community also has a golf
course and country club, which was sold by the Company for
$1,000,000 in the first quarter of 1993.

The Company reopened Sunny Hills for retail lot sales in
mid-1989. Revenues in 1995 will be generated from collections on
existing contracts receivable, from retail land sales and from
the recognition of deferred revenue as land development and lot
exchanges proceed.

PINE RIDGE

Pine Ridge, with a population of approximately 2,250, is
located 34 miles southwest of Ocala. The community's facilities
include an equestrian club and tennis courts. In May, 1987, the
Company completed the $8,500,000 sale of its remaining inventory
and golf course at Pine Ridge. Prior to the sale, the Company
had sold over 3,500 lots and tracts and over 53 single-family
homes in Pine Ridge.

MARION OAKS

Marion Oaks, with a population of approximately 7,500
residents, is located 18 miles south of Ocala. Over 20,000 lots
and tracts and over 2,700 single-family homes have been sold in
the community. The community includes playgrounds, two golf
courses (one of which was sold in 1988 and the second which was
transferred to the Company's lenders on October 11, 1991) and
several recreation buildings. A shopping center and several
houses of worship are located in the community. The Company has
completed 311 miles of road. The Company re-entered the
single-family housing business at this community in December,
1992 with the opening of its

10


FeatherNest housing village. The Company approved a Purchase and
Sale Agreement with Conquistador Development Corporation ("Second
Conquistador Acquisition") for the sale of the remaining lot
inventory in the Company's Feather Nest community at Marion Oaks
, as well as other property, in consideration for the
satisfaction of $2,599,300 of principal and accrued interest on
the Second and Third Selex Loans, which is anticipated to close
by April 30, 1995. See "Housing" and "Marketing". Revenues in
1995 will be generated from the sale of land inventory, from
housing sales, from the recognition of deferred revenue as land
development and lot exchanges proceed, from collections on
existing contracts receivable and from the Company's real estate
brokerage operation.

SEMINOLE WOODS

Seminole Woods, with a population of approximately 370, is
comprised of 1,554 acres of property located 20 miles north of
Orlando. The community, comprised of 262 single-family lots,
each a minimum of five acres, has been sold out and development
completed.

TIERRA VERDE

Tierra Verde, with a population of approximately 4,000, is a
666-acre waterfront subdivision located eight miles south of St.
Petersburg. It was developed and marketed pursuant to a 50% joint
venture between a wholly-owned subsidiary of the Company and an
unaffiliated corporation which filed a petition for bankruptcy
under the Bankruptcy Code in 1985. The community has been sold
out and development completed. The venture, which extended until
December 31, 1990, provided for the Company's subsidiary to
receive a management fee and to share in the venture's results of
operations equally with its venture partner. The venture was
extended for the purposes of winding down operations which were
completed in 1993.

OTHER PROPERTIES

OTHER LAND ASSETS

The Company also owns 92 acres of land in Florida adjacent
to its existing communities which is being marketed by the
Company's commercial sales division.

OTHER BUSINESSES

The Company's title insurance subsidiary was established in
1978 in order to reduce title insurance, legal and certain
related closing costs incurred by the Company in transferring
title of its land and housing products to its purchasers. The
subsidiary serves as an agent for TICOR Title Insurance Company,
Chicago Title Insurance Company and other title insurers. The
Company's realty subsidiary performs real estate brokerage and
rental services at the Company's Marion Oaks and Sunny Hills
communities.

EMPLOYEES

At December 31, 1994, the Company had 32 employees, of whom
28 were involved in executive, administrative, sales and
community maintenance capacities and 4 were involved with the
title insurance subsidiary. Certain of the Company's development
activities are carried out by subcontractors who separately
employ additional personnel. Given the 78% reduction in staffing
levels and the cutbacks in employee benefits that have been
required since December, 1993 by the Company's liquidity
situation, the Company's employee relations are somewhat tenuous.


11



COMPETITION

The Company faces competition primarily from property owners
in the Company's communities seeking to resell their land. The
Company is also facing competition, on a regional level, with
other builders and developers in the sale of single-family
housing. Such competition is generally based upon location,
price, reputation, quality of product and the existence of
commercial and recreational facilities and amenities.

REGULATION

The Company's real estate business is subject to regulation
by various local, state and federal agencies. The communities are
increasingly subject to substantial regulation as they are
planned, designed and constructed, the nature of such regulation
extending to improvements, zoning, building, environmental,
health and related matters. Although the Company has been able
to operate within the regulatory environment in the past, there
can be no assurance that such regulations could not be made more
restrictive and thereby adversely affect the Company's
operations.

COMMUNITY DEVELOPMENT

In Florida, as in many growth areas, local governments have
sought to limit or control population growth in their communities
through restrictive zoning, density reduction, the imposition of
impact fees and more stringent development requirements.
Although the Company has taken such factors into consideration in
its master plans by agreeing, for example, to make improvements,
construct public facilities, and dedicate certain property for
public use, the increased regulation has lengthened the
development process and added to development costs.

The implementation of the Florida Growth Management Act of
1985 (the "Act") has now commenced. The Act precludes the
issuance of development orders or permits if public facilities
such as transportation, water and sewer services will not be
available concurrent with development. Development orders have
been issued for, and development has commenced in, the Company's
existing communities (with development being virtually completed
in certain of these communities). Thus, such communities are
less likely to be affected by the new growth management policies
than future communities. Any future communities developed by the
Company will be strongly impacted by new growth management
policies. Since the Act and its implications are consistently
being re-examined by the State, together with local governments
and various state and local governmental agencies, the Company
cannot further predict the timing or the effect of new growth
management policies, but anticipates that such policies may
increase the Company's permitting and development costs.

On September 30, 1988, the Company entered into an agreement
with Citrus County, Florida to establish the procedure for
transferring final maintenance responsibilities for roads in the
Company's Citrus Springs subdivision to Citrus County. The
agreement obligated the Company to perform certain remedial work
on previously completed improvements within the Citrus Springs
subdivision by June 1, 1991. The Company was unable to complete
this work due to the lack of available funds and negotiated a
final settlement with Citrus County for the transfer of final
maintenance responsibility for the roads to the County. The
Agreement principally requires the Company to pay $400,000 over a
two year period. It is anticipated that this Agreement will be
signed in April 1995.

The Company's present development schedule for completing
improvements to approximately 600 acres at its St. Augustine
Shores community does not coincide with the current development
requirements of the Planned Unit Development ("PUD") approved by
St. Johns County. The Company is seeking a modification of the
PUD
development requirements to be coincident with the Company's
development plans at St. Augustine Shores.

The Company's corporate performance bonds to assure the
completion of development at its St. Augustine Shores community
expired in 1993. Such bonds cannot be renewed due to a change in
the policy of the Board of County Commissioners of St. Johns
County which precludes allowing any developer to secure the
performance of

12



development obligations by the issuance of corporate bonds. In
the event that St. Johns County elects to undertake the
completion of such development work, the Company would be
obligated with respect to 1,000 unimproved lots at St. Augustine
Shores in the amount of approximately $6,200,000. The Company
has proposed the formation of a community development district as
a funding source and submitted an alternative assurance program
for the completion of such development and improvements.

In the third quarter of 1991, St. Johns County, Florida
acquired the St. Augustine Shores utility company, formerly owned
by Topeka, under an action framed as a condemnation suit. The
County has contended that it is not obligated, as was Topeka, to
extend utility lines at its cost to future residents of the
Company's St. Augustine Shores community. The Company has had
discussions with Topeka and the County in attempt to reach a
resolution to this dispute. If a satisfactory resolution is not
achieved, it may be necessary for the Company to institute
appropriate legal proceedings to assure the installation of
utility lines.


ENVIRONMENTAL

To varying degrees, certain permits and approvals will be
necessary to complete the development of all of the Company's
communities. Despite the fact that the Company has obtained
substantially all of the permits and authorizations necessary to
proceed with its development work on communities presently being
marketed, additional approvals may be required to develop certain
platted properties in certain communities to be marketed in the
future. Although the Company cannot predict the impact of such
requirements, they could result in delays and increased
expenditures. In addition, the continued effectiveness of
permits and authorizations already granted is subject to many
factors, some of which, including changes in policies, rules and
regulations and their interpretation and application, are beyond
the Company's control.

Certain of the Company's development permits for a portion
of its St. Augustine Shores community issued by the St. Johns
Water Management District and the U.S. Army Corps of Engineers
are due to expire on dates prior to the Company's planned
completion of improvements within the community. The Company has
submitted new permit applications that will coincide with the
Company's development plans. Since there can be no assurance
that the Company will be successful in obtaining such new permits
in a timely manner, the Company may be required to alter its
development plans for this community.

The Company is aware of studies indicating that prolonged
exposure to radon gas may be hazardous to one's health. Such
studies further indicate that radon gas is apparently associated
with mining and earth moving activities, particularly in
phosphate-bearing geological formations. Since phosphate mining
has, over the years, constituted a significant industry in
Florida, various state and local governmental agencies are in the
process of attempting to determine the nature and extent of
indoor radon gas intrusion throughout the state. Similar studies
undertaken by the Company at its Citrus Springs community
indicate that less than 1% of its property in that community may
be affected by radon gas; studies conducted at the Company's
Marion Oaks community revealed no indications of potential indoor
radon gas problems. None of the other properties owned by the
Company are situated over geological formations which are
suspected of causing radon gas problems. Consequently, the
existence of radon gas in Florida is not expected to materially
affect the business or financial condition of the Company.

The Company owns and operates above ground and underground
fuel storage tanks at its communities. The Florida Department of
Environmental Regulation ("DER") is responsible not only for
regulating these tanks, but for developing and implementing plans
and programs to prevent the discharge of pollutants by such
facilities. The Company has registered its storage tanks with
the DER, installed monitoring wells at all underground
facilities, constructed containment devices around above ground
storage tanks, replaced or properly abandoned faulty tanks or
equipment and conducts periodic inspections and monitoring of all
facilities. All underground tanks will be replaced, retrofitted
or abandoned pursuant to schedules established under Florida law.


13



In December, 1988, the Company surveyed all of its fuel
facilities and reported any facility which exhibited evidence of
potential soil contamination to the DER prior to the deadline for
acceptance into the Early Detection Incentive ("EDI") Program.
The EDI Program provides for the State to assume the financial
responsibility for any necessary clean-up operations when
suspected contamination has been voluntarily reported by the
facility owner and accepted into the program by the DER.
Although all of the Company's sites have not yet been inspected
by the DER to verify the existence of significant contamination,
many sites have already been accepted into the EDI program.

MARKETING

The Company is also subject to a number of statutes imposing
registration, filing and disclosure requirements with respect to
homesites and homes sold or proposed to be sold to the public.
On the state level, the Company's land sales activities are
subject to the jurisdiction of the Division of Florida Land
Sales, Condominiums and Mobile Homes (the "Division") which
requires registration of subdividers and subdivided land; reviews
the contents of advertising and other promotional material;
inspects the Company's land and development work; exercises
jurisdiction over sales practices; and requires full disclosure
to prospective purchasers of pertinent information relating to
the property offered for sale.

OTHER OBLIGATIONS

As a result of the delays in completing the land
improvements to certain property sold in certain of its Central
and North Florida communities, the Company fell behind in meeting
its contractual obligations to its customers. In connection with
these delays, the Company, in February, 1980, entered into a
Consent Order with the Division which provided a program for
notifying affected customers. The Consent Order, which was
restated and amended, provided a program for notifying affected
customers of the anticipated delays in the completion of
improvements (or, in the case of purchasers of unbuildable lots
in certain areas of the Company's Sunny Hills community, the
transfer of development obligations to core growth areas of the
community); various options which may be selected by affected
purchasers; a schedule for completing certain improvements; and a
deferral of the obligation to install water mains until requested
by the purchaser. Under an agreement with Topeka, Topeka's
utility companies have agreed to furnish utility service to the
future residents of the Company's communities on substantially
the same basis as such services were provided by the Company.
The Consent Order also required the establishment of an
improvement escrow account as assurance for completing such
improvement obligations. In June, 1992, the Company entered into
the 1992 Consent Order with the Division, which replaced and
superseded the original Consent Order, as amended and restated.
Among other things, the 1992 Consent Order consolidated the
Company's development obligations and provided for a reduction in
its required monthly escrow obligation to $175,000 from
September, 1992 through December, 1993. Beginning January, 1994
and until development is completed or the 1992 Consent Order is
amended, the Company is required to deposit $430,000 per month
into the escrow account. To meet its current escrow and
development obligations under the 1992 Consent Order, the Company
is required to deposit into escrow $5,160,000 in 1994 and
$3,519,000 in 1995. As part of the assurance program under the
1992 Consent Order, the Company and its lenders granted the
Division a lien on certain contracts receivable (approximately
$7,528,000 as of December 31, 1994) and future receivables. The
Company defaulted on its obligation to escrow $430,000 per month
for the period of January, 1994 through the present and, in
accordance with the 1992 Consent Order, collections on Division
receivables were escrowed for the benefit of purchasers from
March 1, 1994 through April 30, 1994. In May, 1994 the Company
implemented a program to exchange purchasers who contracted to
purchase property which is undeveloped to property which is
developed. As of March 24, 1995, approximately 75% of the
customers whose lots are currently undeveloped have opted to
exchange. The Company's goal is to eliminate its development
obligation (with the exception of its maintenance obligation in
Marion Oaks) under the 1992 Consent Order through this exchange
program, completion of two commercial areas in Marion Oaks, sale
of its second Citrus Springs Golf Course (with the buyer assuming
the development obligation) and settlement of all remaining
maintenance and improvements obligations in Citrus Springs
through a final agreement with Citrus County (scheduled for
approval in April 1995). Consequently, the Division has allowed
the Company to utilize


14



collections on receivables since May 1, 1994. Pursuant to the
1992 Consent Order, the Company has limited the sale of
single-family lots to lots which front on a paved street and are
ready for immediate building. Because of the Company's default,
the Division could also exercise other available remedies under
the 1992 Consent Order, which remedies entitle the Division,
among other things, to halt all sales of registered property. As
of December 31, 1994, the Company had estimated development
obligations of approximately $2,412,000 on sold property, an
estimated liability to provide title insurance and deeding
costing $1,300,000 and an estimated cost of street maintenance,
prior to assumption of such obligations by local governments, of
$2,948,000, all of which are included in deferred revenue. The
total cost, including the previously mentioned obligations, to
complete improvements at December 31, 1994 to lots subject to the
1992 Consent Order and to lots in the St. Augustine Shores
community was estimated to be approximately $17,600,000. As of
December 31, 1994 and December 31, 1993 the Company had in escrow
approximately $911,000 and $1,664,000, respectively, specifically
for land improvements at certain of its Central and North Florida
communities.

The Company's land sales activities are further subject to
the jurisdiction of the laws of various states in which the
Company's properties are offered for sale.

On the federal level, the Company's homesite installment
sales are subject to the Federal Consumer Credit Protection
("Truth-in-Lending") Act. In addition, the Company's activities
are subject to regulation by the Interstate Land Sales
Registration Division ("ILSRD"), which administers the Interstate
Land Sales Full Disclosure Act. That Act requires that the
Company file with ILSRD copies of applicable materials on file
with the Division as to all properties registered; certain
properties must be registered directly with ILSRD, in addition to
being registered with the Division.

The Company has either complied with applicable statutory
requirements relative to the properties it is offering or has
relied on various statutory exemptions which have relieved the
Company from such registration, filing and disclosure
requirements. If these exemptions do not continue to remain
available to the Company, compliance with such statutes may
result in delays in the offering of the Company's properties and
products to the public.

In addition, Florida and other jurisdictions in which the
Company's properties are offered for sale have recently
strengthened, or are considering strengthening, their regulation
of subdividers and subdivided lands in order to provide further
assurances to the public, particularly given the adverse
publicity surrounding the industry which existed in 1990. The
Company has attempted to take appropriate steps to modify its
marketing programs and registration applications in the face of
such increased regulation, but has incurred additional costs and
delays in the marketing of certain of its properties in certain
states and countries. For example, the Company has complied with
the regulations of certain states which require that the Company
sell its properties to residents of those states pursuant to a
deed and mortgage transaction, regardless of the amount of the
down payment. The Company intends to continue to monitor any
changes in statutes or regulations affecting, or anticipated to
affect, the sale of its properties and intends to take all
necessary and reasonable action to assure that its properties and
its proposed marketing programs are in compliance with such
regulations, but there can be no assurance that the Company will
be able to timely comply with all regulatory changes in all
jurisdictions in which the Company's properties are presently
offered for sale to the public.

Real estate salespersons must, absent exemptions which may
be available to employees of the property owner, be licensed in
the jurisdiction in which they perform their activities. Real
estate brokerage companies in Florida, as well as their brokers
and salespersons, must be licensed by the Florida Real Estate
Commission.

MISCELLANEOUS

In addition, various other subsidiaries and divisions of the
Company are subject to regulation by local, state and federal
agencies. Such regulation extends to the licensing of operations,
operating areas and personnel; the establishment of safety and
service standards; and various other matters.

15



ITEM 3

LEGAL PROCEEDINGS

In the action styled GARCIA V. DELTONA ET, AL, Case No.
86-03542, filed in the Circuit Court for Dade County, Florida, on
January 30, 1986, the plaintiff had sought to recover $2,000,000
allegedly paid to the Company on four installment land sales
contracts, claiming fraud and misrepresentation on the part of
one of the Company's independent sales representatives and other
violations of law. The Company had cancelled the contracts in
question according to their terms for default of the payment
obligations by the purchaser. Although the Company negotiated a
settlement of this action which provides for the Company to
convey to the plaintiff property which has a value equivalent to
the monies paid by the plaintiff to the Company under the
cancelled contracts, the plaintiff has asserted that the Company
has breached the settlement agreement by failing to convey
sufficient property which meets the criteria of the settlement
agreement. The Company is of the belief that the property
conveyed complies with such criteria. The plaintiff could seek a
judgment of $5,400,000, plus interest, less the value of the
property transferred. The parties are currently attempting to
resolve the dispute by reaching an agreement as to transferring
alternative property that may be used for settlement purposes.

The Company was previously sued by its landlord for breach
of lease in the action styled FIVE POINTS LIMITED V. THE DELTONA
CORPORATION, Case No. 93-22877, filed in the Circuit Court for
Dade County, Florida, which has been settled and a stipulation
filed. Although the basic matter has been settled, continuing
performance provisions of the settlement agreement are
outstanding. The Company has entered into a short term lease
agreement with the landlord and/or its affiliate for a term of
lease of one (1) year with a ninety (90) day cancellation
provision. Certain payments have been paid to the landlord and a
letter of credit in the amount of $500,000, drawable after August
31, 1995, was conveyed to the landlord. Funding of the
settlement was obtained through a loan to the Company. The Court
continues to retain jurisdiction to enforce the Writ of
Possession for removal of the Company in the event the Company
fails to vacate its premises after ninety (90) days notice is
given in accordance with the short term lease agreement with the
landlord.

In the action styled ESTATE OF BOBINGER ET AL. V. THE
DELTONA CORPORATION, the plaintiff class sued the Company in the
Circuit Court of Dade County Case No. 87-45051 for breach of
contract and for recovery of monies paid on contracts for Marco
property that will not be developed by the Company. The matter
was settled pending performance of the settlement agreement. The
court entered a final judgment approving the settlement and
retained jurisdiction to enforce the settlement. The Company
continues to have certain obligations to the class under the
settlement. The Company advises that it is negotiating with the
class concerning certain unpaid tax obligations and other
matters. In the opinion of the Company, residual obligations of
the Company that are due and payable in the future pursuant to
the settlement may approximate up to $2,000,000. The Company has
provided an allowance for Marco permit costs which encompass
these obligations. See "Management's Discussion and Analysis"
and Note 9 to the consolidated financial statements.

In the action styled BRUCE WEINER V. THE DELTONA CORPORATION
ET AL., the plaintiff, Bruce Weiner, prior Executive Vice
President of the Company, sued the Company on April 28, 1994 for
alleged breach of employment contract seeking damages of
approximately $750,000 and unspecified employee benefits. The
proceeding is pending in the Circuit Court of Dade County,
Florida, Case No. 94-7825-04. Plaintiff's Motion for Summary
Judgment has been denied and a final hearing has been requested.
The Company believes that it has defenses to the claim. In the
event that the Company is not successful in its defenses or a
settlement is not reached, a substantial judgment may be entered
against the Company in favor of the plaintiff. The Company at
the present time is unable to predict the ultimate outcome of the
litigation. The Company intends to continue settlement
discussions with plaintiff.

In the action styled JOSEPH MANCILLA, JR. V. THE DELTONA
CORPORATION, the plaintiff, Joseph Mancilla, Jr., prior Senior
Vice President of the Company, sued the Company on May 17, 1994
for alleged breach of employment contract seeking damages in
excess of $391,000 plus an unspecified amount in employee
benefits, costs and

16




attorneys' fees. The proceeding is pending in the Circuit Court
of Dade County, Florida, Case No. 94-09116. A final hearing has
been set for the week of May 8, 1995. If a settlement is not
reached and the Company is not successful in its defenses, a
substantial judgment may be entered against the Company. The
Company at the present time is unable to predict the ultimate
outcome of the litigation. The Company intends to continue
settlement discussions with plaintiff.

In the action styled MICHELLE GARBIS V. THE DELTONA
CORPORATION, the plaintiff, Michelle Garbis, prior Senior Vice
President and Corporate Secretary of the Company, sued the
Company on August 18, 1994 for alleged breach of employment
contract. The Company settled the matter and a general release
is expected to be entered into.

In an action styled THEODORE MAUREAU V. THE DELTONA
CORPORATION, the Company has been sued by a former Vice President
and employee asserting breach of an oral contract and a claim
based on fraud. The plaintiff asserts unspecified damages and
punitive damages. A Motion to Dismiss is pending. The Company
believes that the proceeding is without merit.

The Company is also a party to certain other legal and
administrative proceedings arising in the ordinary course of
business. The outcome will not, in the opinion of the Company,
have a material adverse effect on the business or financial
condition of the Company.


17



ITEM 5


PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The Company's Common Stock was traded on the New York and
Pacific Stock Exchanges under the ticker symbol DLT until trading
was suspended on April 6, 1994. The following table sets forth
the reported high and low sales prices for the Company's Common
Stock during the periods indicated as reported in the record of
composite transactions for NYSE listed securities.




QUARTER HIGH LOW
_______ ____ ___

1993 - First Quarter................. 3 3/8 2 1/2
Second Quarter................ 3 1/2 1 7/8
Third Quarter................. 2 7/8 1 7/8
Fourth Quarter................ 3 1 7/8

1994 - First Quarter................. 1 1/4 1 1/8





On April 6, 1994, both the New York and Pacific Stock
Exchanges suspended the Company's Common Stock from trading and
instituted procedures to delist the Company's Common Stock. On
June 16, 1994, the Company's Common Stock was formally removed
from listing and registration on the New York Stock Exchange. As
of December 31, 1994, the Company's Common Stock was traded on a
limited basis in the over-the-counter markets. The bid was 1/8
and the ask was 3/8 at the end of the second, third and fourth
quarters of 1994.

The Company has never paid any cash dividends on its Common
Stock. The Company's loan agreements contain certain
restrictions which currently prohibit the Company from paying
dividends on its Common Stock.


18



ITEM 6
SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following table summarizes selected consolidated
financial information and should be read in conjunction with the
Consolidated Financial Statements. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations".

CONSOLIDATED INCOME STATEMENT DATA
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)



YEARS ENDED
____________________________________________________________________________________

DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 1994 31, 1993 25, 1992 27, 1991 28, 1990
-------- --------- -------- -------- --------

Revenues .....................$ 8,541 $ 12,099 $ 12,217 $ 10,784 $ 29,033
Costs and expenses............ 12,447 20,871 18,935 30,313 46,041
-------- --------- -------- -------- ---------
Income (loss) from continuing
operations before taxes
and extraordinary items...... (3,906) (8,772) (6,718) (19,529) (17,008)
Provision for income taxes... -- -- 90 -- --
-------- --------- -------- ------- -------

Income (loss) from operations
before extraordinary items.. (3,906) (8,772) (6,808) (19,529) (17,008)
Extraordinary items:
Gain (loss) from debt
restructuring............... -- -- 10,161 (7,100) --
Gain on settlement related
to the Marco refund
obligation.................. -- -- 3,983 -- --
Net income (loss) applicable
to common stock............. $ (3,906) $ (8,772) $ 7,336 $(26,629) $(17,008)
======== ========= ======== ======== =========

Per common share amounts:
Continuing operations...... $ (.59) $ (1.45) $ (1.19)$ (3.45) $ (3.01)
Extraordinary items........ -- -- 2.48 (1.25) --
-------- --------- -------- -------- --------
Net income (loss)............ $ (.59) $ (1.45) $ 1.29 $ (4.70) $ (3.01)
======== ========= ======== ======== =========
Weighted average common shares
outstanding............... 6,514,988 6,056,743 5,694,236 5,660,967 5,647,790
========= ========== ========= ========= =========

CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS)



DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 1994 31, 1993 25, 1992 27, 1991 28, 1990
--------- -------- -------- -------- --------

Total assets................ $ 22,109 $ 26,565 $ 37,050 $ 65,243 $113,003
======== ======== ======== ======== ========
Liabilities................ $ 38,930 $ 40,856 $ 42,569 $ 78,412 $ 99,543
Stockholders' equity
(deficiency).............. (16,821) (14,291) (5,519) (13,169) 13,460
-------- -------- -------- -------- --------
Total liabilities and
stockholders'
equity (deficiency)....... $ 22,109 $ 26,565 $ 37,050 $ 65,243 $113,003
======== ======== ======== ======== ========


19



ITEM 7

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

On June 19, 1992, the Company completed a transaction with
Selex, which resulted in a change in control of the Company.
Under the transaction, Selex loaned the Company $3,000,000
collateralized by a first mortgage on certain of the Company's
property in its St. Augustine Shores, Florida community (the
"First Selex Loan"). The
First Selex Loan initially bears interest at the rate of 10% per
annum with a term of four years and payment of interest deferred
for the first 18 months. Accrued interest due under the First
Selex Loan in the amount of $673,800 was unpaid and in default as
of December 31, 1994.

In conjunction with the First Selex Loan: (i) Empire sold
Selex its 2,220,066 shares of the Company's Common Stock and
assigned Selex its $1,000,000 Note from the Company, with
$225,000 of interest accrued thereon; (ii) Maurice A. Halperin,
Chairman of the Board of Empire and former Chairman of the Board
of the Company,
forgave payment of the $200,000 salary due him for the period of
April, 1990 through April, 1991, which was in arrears; and (iii)
certain changes occurred in the composition of the Company's
Board of Directors. Namely, the six directors serving on the
Company's Board who were previously designated by Empire resigned
and four Selex designees (Messrs. Marcellus H.B. Muyres, Antony
Gram, Cornelis van de Peppel and Cornelis L.J.J. Zwaans) were
elected to serve as directors in their stead. Marcellus H.B.
Muyres was appointed Chairman of the Board and Chief Executive
Officer of the Company. These directors, as well as Leonardus
G.M. Nipshagen, a Selex designee, were then elected as directors
at the Company's 1992 Annual Meeting and re-elected at the
Company's 1993 Annual
Meeting.

As part of the Selex transaction, Selex was granted an option,
approved by the holders of a majority of the outstanding shares
of the Company's Common Stock at the Company's 1992 Annual
Meeting, to convert the Selex Loan, or any portion thereof, into
a maximum of 850,000 shares of the Company's Common Stock at a
per share
conversion price equal to the greater of (i) $1.25 or (ii) 95% of
the market price of the Company's Common Stock at the time of
conversion, but in no event greater than $4.50 per share (the
"Option"). However, on September 14, 1992, Selex formally waived
and relinquished its right to exercise the Option as to 250,000
shares of the Company's Common Stock to enable the Company to
settle certain litigation involving the Company through the
issuance of approximately 250,000 shares of the Company's Common
Stock to the claimants, without jeopardizing the utilization of
the Company's net operating loss carryforward. On February 17,
1994, Selex exercised the remaining full 600,000 share Option at
a conversion price of $1.90 per share, such that $1,140,000 in
principal was repaid under the First Selex Loan through such
conversion. As a consequence of such conversion, Selex holds
2,820,066 shares of the Company's Common Stock (42.06% of the
outstanding shares of Common Stock of the Company based upon the
number of shares of the Company's Common Stock outstanding as of
March 24, 1995).

Pursuant to the Selex transaction, $1,000,000 of the proceeds
from the First Selex Loan was used by the Company to acquire
certain commercial and multi-family properties at the Company's
St. Augustine Shores community at their net appraised value, from
Mr. Muyres and certain entities affiliated with Messrs. Zwaans
and Muyres. Namely, (i) $416,000 was used to acquire 48
undeveloped condominium units (twelve 4 unit building sites) and
4 completed (and rented) condominium units from Conquistador, in
which Messrs. Zwaans and Muyres serve as directors, as well as
President and Secretary/Treasurer, respectively; (ii) $485,000
was used to acquire 4 commercial lots from Swan Development
Corporation, in which Messrs. Zwaans and Muyres also serve as
directors, as well as President and Secretary, respectively; and
(iii) approximately $99,000 was used to reacquire, from Mr.
Muyres, all of his rights, title and interest in that certain
contract with the Company for the purchase of a commercial tract
in St. Augustine Shores, Florida. None of the commercial land
and multi-family property acquired by the Company from Mr. Muyres
and certain entities affiliated with Messrs. Zwaans and Muyres
collateralizes the First Selex Loan. In March, 1994, Conquistador
exercised its right to repurchase certain of the multi-family
property from the Company (which right had been granted in
connection with the June, 1992



20



transaction) at a price of $312,000, of which $260,000 was paid
in cash to the Company and $52,000 was applied to reduce interest
due to Selex under the Second Selex Loan ("First Conquistador
Acquisition").

In December, 1992, Mr. Gram, a director of the Company and
beneficial owner of the Common Stock of the Company held by
Selex, acquired all of the Company's outstanding bank debt and
then assigned same to Yasawa, of which Mr. Gram is also the
beneficial owner. Yasawa simultaneously completed a series of
transactions with the Company which involved the transfer of
certain assets to Yasawa or its affiliated companies, the
acquisition by Yasawa of 289,637 shares of the Company's Common
Stock through the exercise of warrants previously held by the
banks, the provision of a $1,500,000 line of credit to the
Company and the restructuring of the remaining debt as a
$5,106,000 Yasawa Loan. Principal repayments aggregating
$341,000 were made in 1993 and 1994 to reduce the Yasawa Loan to
$4,765,000 as of December 31, 1994. On April 30, 1993, Selex
loaned the Company an additional amount of $1,000,000 pursuant to
the Second Selex Loan and since July 1, 1993 made further loans
to the Company aggregating $4,400,000 under the Third Selex Loan.
Principal of $39,000 had been repaid under the
Second Selex Loan through December 31, 1994. As of December 31,
1994, Yasawa has loaned the Company an additional sum of
$2,122,000 pursuant to the Second Yasawa Loan. As a consequence
of these transactions, the Company had loans outstanding from
Selex, Yasawa and their affiliates on December 31, 1994 in the
aggregate amount of approximately $19,470,000, including
interest. The Company has approved a Purchase and Sale Agreement
with Conquistador Development Corporation ("Second Conquistador
Acquisition") for the sale of an administration building and
multi-family site in the Company's St. Augustine Shores community
as well as the remaining lot inventory in the Company's Feather
Nest community at Marion Oaks in consideration for the
satisfaction of $2,599,300 of principal and accrued interest on
the Second and Third Selex Loans. The amount of debt reduction
is equivalent to the amount of Mr. Marcel Muyres' participation
in those loans as of January 31, 1995. In a separate
transaction, Conquistador Development Corporation and the Company
approved a Purchase and Sale Agreement ("Third Conquistador
Acquisition") for the sale of four single family residential lots
in the St. Augustine Shores community for $100,000 in cash. The
Second and Third Conquistador Acquisitions are anticipated to
close by April 30, 1995. The loans from Selex, Yasawa and their
affiliates are secured by substantially all of the assets of the
Company. See Note 5 to Consolidated Financial Statements.

The Company has stated in previous filings with the Commission
that the obtainment of additional funds to implement its
marketing program and achieve the objectives of its business plan
is essential to enable the Company to maintain operations and
continue as a going concern. Since December, 1992, the Company
has been dependent on loans and advances from Selex, Yasawa and
their affiliates in order to implement its marketing program and
assist in meeting its working capital requirements. As stated
above, during the last six months of 1993, Selex, Yasawa and
their affiliates loaned the Company an aggregate of $4,400,000
pursuant to Third Selex Loan. Funds advanced under the Third
Selex Loan enabled the Company to commence implementation of the
majority of its marketing program in the third quarter of 1993.
The full benefits were not realized in 1993 and the Company was
unable to secure financing. As of December 31, 1994, Yasawa had
advanced ("Second Yasawa Loan") a total of $2,122,000 to meet the
Company's minimum working capital requirements, pay settlements
of outstanding amounts due certain trade creditors reducing the
Company's accounts payable by more than $1,000,000 and settle
certain litigation reducing the Company's exposure in excess of
$5,000,000.

On March 10, 1994, the Company was advised that Selex filed
Amendment No. 2 dated February 17, 1994 to its Schedule 13D (the
"Amendment") with the Commission. In the Amendment, Selex
reported that it, together with Yasawa and their affiliates were
uncertain as to whether they would provide any further funds to
the Company.
The Amendment further stated that Selex, Yasawa and their
affiliates, were seeking third parties to provide financing for
the Company and that as part of any such transaction, they would
be willing to sell or restructure all or a portion of their loans
and Common Stock in the Company.

Inasmuch as funding is not presently available to the Company
from external sources and, as stated in their Amendment, Selex,
Yasawa and their affiliates have not determined whether they will
provide any further funds to the Company, the Company is facing a
severe cash shortfall. As a consequence of its liquidity
position, the
21



Company has defaulted on certain obligations, including its
escrow obligations to the Division pursuant to the Company's 1992
Consent Order and its obligation to make required interest
payments under loans from Selex, Yasawa and their affiliates.
Furthermore, the Company has not paid delinquent real estate
taxes aggregating approximately $2,676,000 at December 31, 1994
and is also subject to certain pending litigation by former
employees, which may adversely affect the financial condition of
the Company. See "Legal Proceedings."

The Company is continuing to seek third parties to provide
financing. As part of any such transaction, Selex, Yasawa and
their affiliates have indicated that they are willing to sell or
restructure all or a portion of their loans and Common Stock in
the Company. They have also indicated that they are willing to
sell their interests in the Company at a significant discount.
Consummation of any such transaction may result in a change in
control of the Company. There can be no assurance, however, that
any such transaction will result or that any financing will be
obtained. Accordingly, the Company's Board of Directors is also
considering other appropriate action given the severity of the
Company's liquidity position including but not limited to filing
for protection under the federal bankruptcy laws. See "Business:
Recent Developments", "Legal Proceedings" and Notes 1, 5 and 8 to
Consolidated Financial Statements.

RESULTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993

REVENUES

Total revenues were $8,541,000 for 1994 compared to
$12,099,000 for 1993.

Gross land sales were $2,994,000 for 1994 versus $3,170,000
for 1993. Net land sales (gross land sales less estimated
uncollectible installment sales and contract valuation discount)
decreased to $2,058,000 for 1994 from $2,432,000 for 1993. The
decrease in sales reflects the curtailment of the Company's
marketing program in 1994.

Bulk land sales were $315,000 in 1994 as compared to bulk land
sales of $113,000 in 1993. In light of the Company's diminished
bulk land sales inventory it is anticipated that in the future,
the Company will produce a negligible volume of bulk land sales.
See "Liquidity and Capital Resources: Mortgages and Similar
Debt".

The Company re-entered the single-family housing business in
December, 1992. Revenues are not recognized from housing sales
until the completion of construction and passage of title.
Housing revenues were $2,543,000 for 1994 compared to $344,000 in
1993.

The following table reflects the Company's real estate product
mix for 1994 and 1993 (in thousands):



YEARS ENDED
------------------------------------
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------


Gross Land Sales:
Bulk sales................... $ 315 $ 113
Retail sales*................ 2,679 3,057
------ -------
Total...................... 2,994 3,170
------ -------
Housing Sales:
Single Family................ 2,506 314
Vacation Ownership........... 37 30
------ -------
Total...................... 2,543 344
------ -------
Total Real Estate.......... $5,537 $ 3,514
====== =======


_____________
* New retail land sales contracts entered into, including deposit sales on
which the Company has received less than 20% of the sales price, net of
cancellations, for the years ended December 31, 1994 and December 31,
1993 were $1,910,000 and $4,106,000, respectively. Such contracts are
not included in retail land sales until the applicable rescission period
has expired and the Company has received payments totalling 20% of the
contract sales prices. See Note 1 to the Consolidated Financial
Statements.


22



Improvement revenues result from recognition of revenues
deferred from prior period sales. Recognition occurs as
development work proceeds on the previously sold property or
customers are exchanged to a developed lot. Improvement revenues
totalled $1,214,000 in 1994 as compared to $4,725,000 for 1993.
The decrease was due to the Company's financial condition which
caused the Company to stop development in the first quarter of
1994.

Interest income was $1,046,000 for 1994 compared to $1,197,000
for 1993. This decrease is the result of lower contracts
receivable balances.

Other revenues were $629,000 for 1994 compared to $3,401,000
in 1993. This decrease was the result of the termination of its
lease on the Marco Shores Country Club on December 31, 1993 and
the sale of the Marco Island Realty in November, 1993.

Included in 1994 results is a gain of $1,051,000 from the
termination of the lease on the Company's corporate headquarters
in Miami.

COSTS AND EXPENSES

Costs and expenses were $12,447,000 for 1994 compared to
$20,871,000 in 1993. Cost of sales totalled $3,845,000 for 1994
versus $6,441,000 for 1993. These decreases are primarily due to
the termination of development work in the first quarter of 1994
and the sale of the Marco Island Realty and the termination of
the lease of the Marco Shores Country Club in 1993.
Additionally, the Company completed the first phase of its
Compromise and Settlement Agreement program with its trade
creditors during the third quarter of 1994. Costs and expenses
were reduced by approximately $430,000 as a result of these
settlements. Gross profit margins increased to 55.0% from 46.7%.
Profit margins are increasing primarily due to increased margins
on improvement revenues resulting from favorable cost variances.

Commissions, advertising and other selling expenses totalled
$2,608,000 for 1994 versus $6,008,000 for 1993. Advertising and
promotional expenditures decreased to $275,000 in 1994 from
$1,521,000 in 1993 as a result of the reduction in the Company's
marketing programs.

General and administrative expenses were $2,984,000 in 1994
versus $3,790,000 for 1993. General and administrative expenses
have decreased primarily due to overhead reductions implemented
in the first quarter of 1994 and settlement of the Company's
lease obligation on its corporate headquarters in October 1994.

Real estate tax expense was $1,163,000 in 1994 compared to
$975,000 in 1993. Included in real estate tax expense is
delinquent interest and administrative fees on 1992 and 1993
delinquent taxes, which accrue interest at 18% per annum.

Interest expense was $1,847,000 for 1994, as compared to
$1,257,000 for 1993, or a 47% increase. Total interest costs
(including capitalized interest) were $1,847,000 and $1,421,000
for 1994 and 1993, respectively. The increase in interest
expense is primarily the result of the increase in debt. No
interest was capitalized in 1994 since the Company had stopped
land development work at its communities.

NET INCOME

The Company reported a net loss of $3,906,000 for 1994,
compared to a net loss of $8,772,000 for 1993. The 1993 results
include a provision for contract cancellations of $2,400,000.
Included in 1994 results is a gain of $1,051,000 from the
termination of the lease on the Company's corporate headquarters
in Miami.

23



RESULTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1993 AND DECEMBER 25, 1992

REVENUES

Total revenues were $12,099,000 for 1993 compared to
$12,217,000 for 1992. Included in 1992 revenues is a third
quarter gain of $448,000 from the sale of the administration
building at the Company's Citrus Springs community.

Gross land sales were $3,170,000 for 1993 versus $2,515,000
for 1992. Net land sales (gross land sales less estimated
uncollectible installment sales and contract valuation discount)
increased to $2,432,000 for 1993 from $2,092,000 for 1992. The
modest increase in sales reflects the introduction of the
Company's marketing program which was delayed until the third
quarter of the year.

Retail land sales increased to $3,057,000 from $2,289,000, a
33.5% increase. This increase was due to the third quarter
introduction of the Company's marketing program and reflects
increased spending in 1993 on advertising and promotional
programs to strengthen the Company's marketing organization,
rebuild its retail land sales business and re-enter the
single-family home business.

The Company re-entered the single-family housing business in
December, 1992. The Company recognized revenues from housing
sales of $344,000 for 1993, primarily during the fourth quarter
of the year, and had a backlog of housing sales of $899,000 as of
December 31, 1993.

The following table reflects the Company's real estate product
mix for 1993 and 1992 (in thousands):



YEARS ENDED
-----------------------------------
DECEMBER 31, DECEMBER 25,
1993 1992
------------ ------------

Gross Land Sales:
Bulk sales............. $ 113 $ 226
Retail sales*.......... 3,057 2,289
------- -------
Total.............. 3,170 2,515
------- -------
Housing Sales:
Single Family.......... 314 -0-
Vacation Ownership..... 30 -0-
------- -------
Total.............. 344 -0-
------- -------
Total Real Estate.. $ 3,514 $ 2,515
======= =======

__________
* New retail land sales contracts entered into, including
deposit sales on which the Company has received less than
20% of the sales price, net of cancellations, for the years
ended December 31, 1993 and December 25, 1992 were
$4,106,000 and $2,154,000, respectively. Such contracts are
not included in retail land sales until the applicable
rescission period has expired and the Company has received
payments totalling 20% of the contract sales prices. See
Note 1 to the Consolidated Financial Statements.




Improvement revenues resulted from the recognition of revenue
deferred from prior period sales. Recognition occurs as
development work proceeds on previously sold property.
Improvement revenues totalled $4,725,000 in 1993 as compared to
$2,404,000 for 1992. The increase was due to the Company's
resumption of development work in the third quarter of 1992.

Interest income was $1,197,000 for 1993 compared to $3,584,000
for 1992. This decrease is the result of lower contracts
receivable balances.

24



Other revenues were $3,401,000 for 1993 compared to $4,137,000
in 1992. Included in other revenues for 1992 is the previously
mentioned gain of $448,000 on the sale of the administration
building at the Company's Citrus Springs community, as well as
revenues from the Company's Sunny Hills golf and country club
which was sold in the first quarter of 1993.

COSTS AND EXPENSES

Costs and expenses were $20,871,000 for 1993 compared to
$18,935,000 in 1992. Cost of sales totalled $6,441,000 for 1993
versus $4,605,000 for 1992, primarily due to the resumption of
development work in the third quarter of 1992. Gross profit
margins decreased from 46.7% to 40.9%.

The 1993 results include a provision for contract
cancellations of $2,400,000. Included in the provision is
$1,400,000 for contracts sold in prior years to third parties
which the Company is obligated to repurchase. See Note 2 to
Consolidated Financial Statements.

Commissions, advertising and other selling expenses totalled
$6,008,000 for 1993 versus $3,917,000 for 1992. Advertising and
promotional expenditures increased from $580,000 in 1992 to
$1,521,000 in 1993, reflecting the Company's implementation of
its marketing program.

General and administrative expenses were $3,790,000 in 1993
versus $5,844,000 for 1992. General and administrative expenses
have decreased primarily due to overhead reductions, as part of
the Company's efforts to stabilize its liquidity situation.

Interest expense was $1,257,000 for 1993, as compared to
$3,356,000 for 1992, or a 62.5% decrease. Total interest costs
(including capitalized interest) were $1,421,000 and $3,456,000
for 1993 and 1992, respectively. The decrease in interest cost
is due to lower debt balances.

NET INCOME

The Company reported a net loss of $8,772,000 for 1993,
compared to a net income of $7,336,000 for 1992. The 1993 results
include a provision for contract cancellations of $2,400,000. The
1992 results include a gain of $448,000 on the sale of the
administration building at the Company's Citrus Springs
community, as well as a $10,161,000 extraordinary gain from debt
restructuring and a $3,983,000 extraordinary gain from the
settlement related to the Company's Marco refund obligation.

REGULATORY DEVELOPMENTS WHICH MAY AFFECT FUTURE OPERATIONS

In Florida, as in many growth areas, local governments have
sought to limit or control population growth in their communities
through restrictive zoning, density reduction, the imposition of
impact fees and more stringent development requirements.
Although the Company has taken such factors into consideration in
its master plans, the increased regulation has lengthened the
development process and added to development costs.

On a statewide level, the Florida Legislature adopted and
implemented the Florida Growth Management Act of 1985 (the "Act")
to aid local governments efforts to discourage uncontrolled
growth in Florida. The Act precludes the issuance of development
orders or permits if public facilities such as transportation,
water and sewer services will not be available concurrent with
development. Development orders have been issued for, and
development has commenced in, the Company's existing communities
(with development being virtually completed in certain of these
communities). Thus, such communities are less likely to be
affected by the new growth management policies than future
communities. Any future communities developed by the Company
will be strongly impacted by new growth management policies.
Since the Act and its implications are consistently being
re-examined by the State, together with local governments and
various state and local governmental agencies, the Company
25



cannot further predict the timing or the effect of new growth
management policies, but anticipates that such policies may
increase the Company's permitting and development costs.

In addition to Florida, other jurisdictions in which the
Company's properties are offered for sale have recently
strengthened, or are considering strengthening, their regulation
of subdividers and subdivided lands in order to provide further
assurances to the public, particularly given the adverse
publicity surrounding the industry which existed in 1990. The
Company has attempted to take appropriate steps to modify its
marketing programs and registration applications in the face of
such increased regulation, but has incurred additional costs and
delays in the marketing of certain of its properties in certain
states and countries. For example, the Company has complied with
regulations of certain states which require that the Company sell
its properties to residents of those states pursuant to a deed
and mortgage transaction, regardless of the amount of the down
payment. The Company intends to continue to monitor any changes
in statutes or regulations affecting, or anticipated to affect,
the sale of its properties and intends to take all necessary and
reasonable action to assure that its properties and its proposed
marketing programs are in compliance with such regulations, but
there can be no assurance that the Company will be able to timely
comply with all regulatory changes in all jurisdictions in which
the Company's properties are presently offered for sale to the
public.

LIQUIDITY AND CAPITAL RESOURCES

MORTGAGES AND SIMILAR DEBT

Indebtedness under various purchase money mortgages and loan
agreements is collateralized by substantially all of the
Company's assets, including stock of certain wholly-owned
subsidiaries.

The following table presents information with respect to
mortgages and similar debt (in thousands):




YEARS ENDED
_____________________________________
DECEMBER 31, DECEMBER 31,
1994 1993
------------- -------------

Mortgage Notes Payable ......... $ 14,070 $ 13,284
Other Loans..................... 2,500 2,500
-------- --------
Total Mortgages and
Similar Debt... $ 16,570 $ 15,784
======== ========

Included in Mortgage Notes Payable is the $3,000,000 First
Selex Loan ($1,860,000 as of December 31, 1994), the $1,000,000
Second Selex Loan ($961,000 as of December 31, 1994) the
$4,400,000 Third Selex Loan ($4,362,400 as of December 31, 1994),
and the $4,900,000 Yasawa Loan ($4,764,600 as of December 31,
1994) and the Second Yasawa Loan ($2,122,000 as of December 31,
1994). Other loans include the $1,000,000 Empire note and the
$1,500,000 Scafholding Loan.

These mortgage notes payable and other loans are in default as
of December 31, 1994 due to the non-payment of interest and
principal. The lenders have not taken any action as a result of
these defaults.

On June 19, 1992, Selex loaned the Company the sum of
$3,000,000 pursuant to the First Selex Loan. The First Selex
Loan is collateralized by a first mortgage on certain of the
Company's unsold, undeveloped property in its St. Augustine
Shores, Florida community. The Loan matures on June 15, 1996 and
provides for principal to be repaid at 50% of the net proceeds
per lot for lots requiring release from the mortgage, with the
entire unpaid balance becoming due and payable at the end of the
four year term. It initially bears interest at the rate of 10%
per annum, with payment of interest deferred for the initial 18
months of the Loan and interest payments due quarterly
thereafter. As part of the Selex transaction, Selex was granted
an option, approved by the holders of a majority of the
outstanding shares of the Company's Common Stock at the Company's
1992 Annual Meeting,

26



which, as modified, enabled Selex to convert the First Selex
Loan, or any portion thereof, into a maximum of 600,000 shares of
the Company's Common Stock at a per share conversion price equal
to the greater of (i) $1.25 or (ii) 95% of the market price of
the Company's Common Stock at the time of conversion, but in no
event greater than $4.50 per share (the "Option"). On February
17, 1994, Selex exercised the Option, in full, at a conversion
price of $1.90 per share, such that $1,140,000 in principal was
repaid under the First Selex Loan through such conversion. As of
March 24, 1995, the Company was in default of the First Selex
Loan inasmuch as accrued interest in the amount of $716,700
(including $673,800 due December 31, 1994) remained unpaid.

One million dollars of the proceeds from the First Selex Loan
was used by the Company to acquire certain commercial and
multi-family properties at the Company's St. Augustine Shores
community at their net appraised value, from Mr. Muyres and
certain entities affiliated with Messrs. Zwaans and Muyres.
Namely, (i) $416,000 was used to acquire 48 undeveloped
condominium units (twelve 4 unit building sites) and 4 completed
(and rented) condominium units from Conquistador, in which
Messrs. Zwaans and Muyres serve as directors, as well as
President and Secretary/Treasurer, respectively; (ii) $485,000
was used to acquire 4 commercial lots from Swan, in which Messrs.
Zwaans and Muyres also serve as directors, as well as President
and Secretary, respectively; and (iii) approximately $99,000 was
used to reacquire, from Mr. Muyres, all of his rights, title and
interest in that certain contracts with the Company for the
purchase of a commercial tract in St. Augustine Shores, Florida.
None of the commercial and multi-family property acquired by the
Company from Mr. Muyres and certain entities affiliated with
Messrs. Zwaans and Muyres collateralizes the First Selex Loan.
In March, 1994, Conquistador exercised its right to repurchase
certain multi-family property from the Company (which right had
been granted in connection with the June, 1992 Selex transaction)
at a price of $312,000, of which $260,000 was paid in cash to the
Company and $52,000 was applied to reduce interest due to Selex
under the Second Selex Loan ("First Conquistador Acquisition").

On December 2, 1992, the Company entered into various
agreements relating to certain of its assets and the
restructuring of its debt with Yasawa, which is beneficially
owned by Mr. Gram. The consummation of these agreements, which
are further described below, was conditioned upon the acquisition
by Gram of the Company's outstanding bank loan.

On December 4, 1992, Gram entered into an agreement with the
lenders, pursuant to which he acquired the bank loan of
approximately $25,150,000 (including interest and fees) for a
price of $10,750,000. In conjunction with such transaction, the
lenders transferred to Gram the warrants which they held that
entitled the holder to purchase an aggregate of 277,387 shares of
the Company's Common Stock at an exercise price of $1.00 per
share. Immediately after the acquisition of the bank loan, Gram
transferred all of his interest in the bank loan, including the
warrants, to Yasawa.

On December 11, 1992, the Company consummated the December 2,
1992 agreements with Yasawa. Under these agreements, Yasawa, its
affiliates and the Company agreed as follows: (i) the Company
sold certain property at its Citrus Springs community to an
affiliate of Yasawa in exchange for approximately $6,500,000 of
debt reduction credit; (ii) an affiliate of Yasawa and the
Company entered into a joint venture agreement with respect to
the Citrus Springs property, providing for the Company to market
such property and receive an administration fee from the venture
(in March, 1994, the Company and the affiliate agreed to
terminate the venture); (iii) the Company sold certain contracts
receivable at face value to an affiliate of Yasawa for debt
reduction credit of approximately $10,800,000; (iv) the Company
sold the Marco Shores Country Club and Golf Course to an
affiliate of Yasawa for an aggregate sales price of $5,500,000,
with the affiliate assuming an existing first mortgage of
approximately $1,100,000 and the Company receiving debt reduction
credit of $2,400,000, such that the Company obtained cash
proceeds from this transaction of $2,000,000, which amount was
used for working capital; (v) an affiliate of Yasawa agreed to
lease the Marco Shores Country Club and Golf Course to the
Company for a period of approximately one year; (vi) an affiliate
of Yasawa and the Company agreed to amend the terms of the
warrants to increase the number of shares issuable upon their
exercise from 277,387 shares to 289,637 shares and to adjust the
exercise price to an aggregate of approximately $314,000; (vii)
Yasawa exercised the warrants in exchange for
27



debt reduction credit of approximately $314,000; (viii) Yasawa
released certain collateral held for the bank loan; (ix) an
affiliate of Yasawa agreed to make an additional loan of up to
$1,500,000 to the Company, thus providing the Company with a
future line of credit (all of which was drawn and outstanding as
of March 24, 1995); and (x) Yasawa agreed to restructure the
payment terms of the remaining $5,106,000 of the bank loan as a
loan from Yasawa (the "Yasawa Loan").

The Yasawa Loan bears interest at the rate of 11% per annum,
with payment of interest deferred until December 31, 1993, at
which time only accrued interest became payable. Commencing
January 31, 1994, principal and interest became payable monthly,
with all unpaid principal and accrued interest being due and
payable on December 31, 1997. During 1994, an assignment of a
mortgage receivable and miscellaneous sales of collateral reduced
the Yasawa Loan to $4,764,600 as of December 31, 1994. As of
March 24, 1995, $5,418,300 in principal and accrued interest was
in default under the Yasawa Loan.

On April 30, 1993 Selex loaned the Company an additional
$1,000,000 collateralized by a first mortgage on certain of the
Company's property in its Marion Oaks, Florida community (the
"Second Selex Loan"). The Second Selex Loan bears interest at
11% per annum, with interest deferred until December 31, 1993.
The Second Selex Loan provides for principal to be repaid at
$3,000 per lot for lots requiring release from the mortgage, with
the entire unpaid principal balance and interest accruing from
January 1, 1994 to April 30, 1994 due and payable on April 30,
1994. Although Selex had certain conversion rights under the
Second Selex Loan in the event the Company sold any Common Stock
or Preferred Stock prior to payment in full of all amounts due to
Selex under the Second Selex Loan, such rights were voided as of
December 31, 1993. As of March 24, 1995, $39,000 in principal and
$52,000 in accrued interest had been repaid under the Second
Selex Loan, but accrued interest of $154,600 due under the Loan
as of March 24, 1995, as well as the principal balance of
$961,000, remained unpaid and in default. The Second
Conquistador Acquisition, discussed below, will, when closed,
satisfy the debt due and payable under the Second Selex Loan.

From July 9, 1993 through December 31, 1993, Selex loaned the
Company an additional $4,400,000 collateralized by a second
mortgage on certain of the Company's property on which Selex
and/or Yasawa hold a first mortgage pursuant to a Loan Agreement
dated July 14, 1993 and amendments thereto (the "Third Selex
Loan"). The Third Selex Loan bears interest at 11% per annum,
with interest deferred until December 31, 1993. Principal is to
be repaid at $3,000 per lot for lots requiring release from the
mortgage, with the entire unpaid principal balance and interest
accruing from January 1, 1994 to April 30, 1994 due and payable
on April 30, 1994. As of March 24, 1995, $37,600 in principal
had been repaid under the Third Selex Loan, but accrued interest
of $742,600 due under the Loan as of March 24, 1995, as well as
the principal balance of $4,362,400, remained unpaid and in
default. The Second Conquistador Acquisition, discussed below,
will, when closed, provide a reduction of the debt due and
payable under the Third Selex Loan.

In February, 1994, Yasawa loaned the Company an additional
amount of approximately $514,900 at an interest rate of 8% per
annum (the "Second Yasawa Loan"). Since May, 1994, additional
amounts were advanced to the Company under the Second Yasawa Loan
to enable the Company to pay certain essential expenses and
effectuate settlements with the Company's principal creditors.
As of March 24, 1995, an aggregate amount of $2,242,000 had been
advanced to the Company under the Second Yasawa Loan and accrued
interest of $115,600 remains unpaid.

The Company has approved a Purchase and Sale Agreement with
Conquistador Development Corporation ("Second Conquistador
Acquisition") for the sale of an administration building and
multi-family site in the Company's St. Augustine Shores community
as well as the remaining lot inventory in the Company's Feather
Nest community at Marion Oaks in consideration for the
satisfaction of $2,599,300 of principal and accrued interest on
the Second and Third Selex Loans. The amount of debt reduction
is equivalent to the amount of Mr. Marcel Muyres' participation
in those loans as of January 31, 1995. In a separate
transaction, Conquistador Development Corporation and the Company
approved a Purchase and Sale Agreement ("Third Conquistador
Acquisition") for


28



the sale of four single family residential lots in the St.
Augustine Shores community for $100,000 in cash. The Second and
Third Conquistador Acquisitions are anticipated to close by April
30, 1995.

As previously stated, Messrs. Muyres and Zwaans also serve as
directors and executive officers of M&M. The Company has leased
certain office space to M&M at its St. Augustine Shores community
pursuant to a Lease Agreement dated August 10, 1990. Although
the aggregate annual rental payments under such Lease are less
than $60,000, as of March 24, 1995, M&M was in default of its
obligations under the Lease inasmuch as delinquent rental
payments (including reimbursement for real estate taxes) of
approximately $21,300 remain unpaid. Payment of delinquent
rental payments will be made upon closing of the Second
Conquistador Acquisition.

Interest due to Selex, Yasawa and their affiliates as of
December 31, 1994 in the aggregate amount of $2,899,500 remained
unpaid and in default as of March 24, 1995. Through March 24,
1995, $1,140,000 in principal was repaid under the First Selex
Loan through the exercise of the above described Option, $39,000
in principal and $52,000 in accrued interest was repaid under the
Second Selex Loan, $37,600 in principal was repaid under the
Third Selex Loan, and $133,900 in principal and $346,000 in
accrued interest was repaid under the Yasawa loan. As of March
24, 1995, the Company had loans outstanding from Selex, Yasawa
and their affiliates in the aggregate amount of approximately
$19,999,400, including interest, all of which are in default,
including approximately $10,359,600, which is owed to Selex,
including accrued and unpaid interest of approximately $2,176,200
(10% per annum on the First Selex Loan, 11% per annum on the
Second and Third Selex Loans and 12% per annum on the $1,000,000
Empire Note assigned to Selex); approximately $7,772,000, which
owed to Yasawa, including accrued and unpaid interest of
approximately $765,400 (11% per annum on the Yasawa Loan and 8%
per annum on the Second Yasawa Loan); and approximately
$1,864,000, which is owed to an affiliate of Yasawa, including
accrued and unpaid interest of approximately $364,000 (12% per
annum). The loans from Selex, Yasawa and their affiliates are
secured by substantially all of the assets of the Company.

On March 10, 1994, the Company was advised that Selex filed an
Amendment to its Schedule 13D filed with the Commission. In the
Amendment, Selex reported that it, together with Yasawa and their
affiliates, were uncertain as to whether they would provide any
further funds to the Company. The Amendment further stated that
Selex, Yasawa and their affiliates were seeking third parties to
provide financing for the Company and that as part of any such
transaction, they would be willing to sell or restructure all or
a portion of their loans and Common Stock in the Company.

The Company has stated in previous filings with the Commission
that the obtainment of additional funds to implement its
marketing program and achieve the objectives of its business plan
is essential to enable the Company to maintain operations and
continue as a going concern. Since December, 1992, the Company
has been dependent on loans and advances from Selex, Yasawa and
their affiliates in order to implement its marketing program and
assist in meeting its working capital requirements. As stated
above, during the last six months of 1993, Selex, Yasawa and
their affiliates loaned the Company an aggregate of $4,400,000
pursuant to Third Selex Loan. Funds advanced under the Third
Selex Loan enabled the Company to commence implementation of the
majority of its marketing program in the third quarter of 1993.
The full benefits of the program could not be realized in 1993
and the Company was unable to secure financing in 1994 to meet
its ongoing working capital requirements and continue its
marketing program. However in 1994, Yasawa advanced ("Second
Yasawa Loan") a total of $2,122,000 as of December 31, 1994 to
meet the Company's minimum working capital requirements, to pay
settlements with certain trade creditors and to settle certain litigation.

Inasmuch as funding is not presently available to the Company
from external sources and, as stated in their Amendment, Selex,
Yasawa and their affiliates have not determined whether they will
provide any further funds to the Company, the Company is facing a
severe cash shortfall. As a consequence of its liquidity
position, the Company has defaulted on certain obligations,
including its escrow obligations to the Division pursuant to the
Company's 1992 Consent Order and its obligation to make required
interest payments under loans from Selex, Yasawa and their
affiliates. Furthermore, the Company has not paid delinquent
real estate taxes which aggregate

29



approximately $2,676,000 as of December 31, 1994 and is also
subject to certain pending litigation from former employees,
which may adversely affect the financial condition of the
Company. See "Legal Proceedings."

The Company is continuing to seek third parties to provide
financing. As part of any such transaction, Selex, Yasawa and
their affiliates have indicated that they are willing to sell or
restructure all or a portion of their loans and Common Stock in
the Company. They have also indicated that they are willing to
sell their interests in the Company at a significant discount.
Consummation of any such transaction may result in a change in
control of the Company. There can be no assurance, however, that
any such transaction will result or that any financing will be
obtained. Accordingly, the Company's Board of Directors is also
considering other appropriate action given the severity of the
Company's liquidity position including, but not limited, to
protection under federal bankruptcy laws. See "Business: Recent
Developments", "Legal Proceedings" and Notes 1, 5 and 8 to
Consolidated Financial Statements.

CONTRACTS AND MORTGAGES RECEIVABLE SALES

In December, 1992, as described above, the Company sold
$10,800,000 of contracts and mortgages receivable to an affiliate
of Yasawa at face value, applying the proceeds therefrom to
reduce the Bank Loan acquired by Yasawa.

In March, 1993 the Company transferred $1,600,000 in
contracts and mortgages receivable generating approximately
$1,059,000 in proceeds to the Company, which was used for working
capital and the creation of a holdback account in the amount
$150,000. As of December 31, 1994, the balance of the holdback
account was $107,000.

In June, 1992 and February, 1990, the Company completed
sales of contracts and mortgages receivable totalling $13,500,000
and $17,000,000, respectively, which generated approximately
$8,000,000 and $13,900,000, respectively, in net proceeds to the
Company. The anticipated costs of the June, 1992 transaction
were included in the extraordinary loss from debt restructuring
for 1991 since the restructuring was dependent on the sale. The
Company recorded a loss of $600,000 on the February, 1990 sale.
In conjunction with these sales the Company granted the purchaser
a security interest in certain additional contracts receivable of
approximately $2,700,000 and conveyed all of its rights, title
and interest in the property underlying such contracts to a
collateral trustee. In addition, these transactions, among other
things require that the Company replace or repurchase any
receivable that becomes 90 days delinquent upon the request of
the purchaser. Such requirement can be satisfied from contracts
in which the purchaser holds a security interest (approximately
$1,297,000 as of December 31, 1994). The purchaser of these
receivables has experienced financial difficulty and filed in
1994 for protection under Chapter 11 of the Federal Bankruptcy
Code. The Company is unable to determine what effect this will
have, if any, on future cancellations, since it is unable to
determine how the bankruptcy will impact servicing and collection
procedures and the customers' determination to continue to pay
under those contracts. The Company has fully reserved for the
amount of the holdback account and the estimated future
cancellations based on the Company's historical experience for
receivables the Company services. However, due to the
uncertainty noted above, the Company does not feel there is
sufficient information to estimate future cancellations and is
unable to determine the adequacy of its reserves to replace or
repurchase receivables that become delinquent. The Company was
unable to replace or repurchase $1,148,000 in delinquent
contracts in 1994, which amount was deducted from the deposit
held by the purchaser of the receivables as security.

The Company was the guarantor of approximately $25,608,000
of contracts receivable sold or transferred as of December 31,
1994, for the transactions described above, had $775,000 on
deposit with purchasers of the receivables as security to assure
collectibility as of such date and had established $775,000 as a
liability for the Company's obligation under the recourse
provisions. The Company has been in compliance with all
receivable transactions since the consummation of sales.

30



The Company anticipates that it will be necessary to
complete additional sales and financings of a portion of its
receivables in 1995. There can be no assurance, however, that
such sales and/or financings can be accomplished.



OTHER OBLIGATIONS

As a result of the delays in completing the land improvements
to certain property sold in certain of its Central and North
Florida communities, the Company fell behind in meeting its
contractual obligations to its customers. In connection with
these delays, the Company, in February, 1980, entered into a
Consent Order with the Division which provided a program for
notifying affected customers. The Consent Order, which was
restated and amended, provided a program for notifying affected
customers of the anticipated delays in the completion of
improvements (or, in the case of purchasers of unbuildable lots
in certain areas of the Company's Sunny Hills community, the
transfer of development obligations to core growth areas of the
community); various options which may be selected by affected
purchasers; a schedule for completing certain improvements; and a
deferral of the obligation to install water mains until requested
by the purchaser. Under an agreement with Topeka, Topeka's
utility companies have agreed to furnish utility service to the
future residents of the Company's communities on substantially
the same basis as such services were provided by the Company.
The Consent Order also required the establishment of an
improvement escrow account as assurance for completing such
improvement obligations. In June, 1992, the
Company entered into the 1992 Consent Order with the Division,
which replaced and superseded the original Consent Order, as
amended and restated. Among other things, the 1992 Consent Order
consolidated the Company's development obligations and provided
for a reduction in its required monthly escrow obligation to
$175,000 from September, 1992 through December, 1993. Beginning
January, 1994 and until development is completed or the 1992
Consent Order is amended, the Company is required to deposit
$430,000 per month into the escrow account. To meet its current
escrow and development obligations under the 1992 Consent Order,
the Company is required to deposit into escrow $5,160,000 in 1994
and $3,519,000 in 1995. As part of the assurance program under
the 1992 Consent Order, the Company and its lenders granted the
Division a lien on certain contracts receivable (approximately
$7,528,000 as of December 31, 1994) and future receivables. The
Company defaulted on its obligation to escrow $430,000 per month
for the period of January, 1994 through the present and, in
accordance with the 1992 Consent Order, collections on Division
receivables were escrowed for the benefit of purchasers from
March 1, 1994 through April 30, 1994. In May, 1994 the Company
implemented a program to exchange purchasers who contracted to
purchase property which is undeveloped to property which is
developed. As of March 24, 1995, approximately 75% of the
customers whose lots are currently undeveloped have opted to
exchange. The Company's goal is to eliminate its development
obligation (with the exception of its maintenance obligation in
Marion Oaks) under the 1992 Consent Order through this exchange
program, completion of two commercial areas in Marion Oaks, sale
of its second Citrus Springs Golf Course (with the buyer assuming
the development obligation) and settlement of all remaining
maintenance and improvements obligations in Citrus Springs
through a final agreement with Citrus County (scheduled for
approval in April 1995). Consequently, the Division has allowed
the Company to utilize collections on receivables since May 1,
1994. Pursuant to the 1992 Consent Order, the Company has
limited the sale of single-family lots to lots which front on a
paved street and are ready for immediate building. Because of
the Company's default, the Division could also exercise other
available remedies under the 1992 Consent Order, which remedies
entitle the Division, among other things, to halt all sales of
registered property. As of December 31, 1994, the Company had
estimated development obligations of approximately $2,412,000 on
sold property, an estimated liability to provide title insurance
and deeding costing $1,300,000 and an estimated cost of street
maintenance, prior to assumption of such obligations by local
governments, of $2,948,000, all of which are included in deferred
revenue. The total cost, including the previously mentioned
obligations, to complete improvements at December 31, 1994 to
lots subject to the 1992 Consent Order and to lots in the St.
Augustine Shores community was estimated to be approximately
$17,600,000. As of December 31, 1994 and December 31, 1993 the
Company had in escrow approximately $911,000 and $1,664,000,
respectively, specifically for land improvements at certain of
its Central and North Florida communities.


31



The Company's continuing liquidity problems have precluded the
timely payment of the full amount of its 1992 and 1993 real
estate taxes, in addition to its 1994 real estate taxes, which
are currently due. On properties where customers have
contractually assumed the obligation to pay into a tax escrow
maintained by the Company, the Company has and will continue to
pay real estate taxes as monies are collected from customers.
Delinquent real estate taxes aggregated approximately $2,676,000
as of December 31, 1994.

The Company's corporate performance bonds to assure the
completion of development at its St. Augustine Shores community
expired in March and June, 1993. Such bonds cannot be renewed
due to a change in the policy of the Board of County
Commissioners of St. Johns County which precludes allowing any
developer to secure the performance of development obligations by
the issuance of corporate bonds. In the event that St. Johns
County elects to undertake and complete such development work,
the Company would be obligated with respect to 1,000 improved
lots at St. Augustine Shores in the amount of approximately
$6,200,000. The Company intends to submit an alternative
assurance program for the completion of such development and
improvements to the County for its approval.

On September 30, 1988, the Company entered into an agreement
with Citrus County, Florida to establish the procedure for
transferring final maintenance responsibilities for roads in the
Company's Citrus Springs subdivision to Citrus County. The
agreement obligated the Company to complete certain remedial work
on previously completed improvements within the Citrus Springs
subdivision by June 1, 1991. The Company was unable to complete
this work by the specified date and negotiated with Citrus County
for the transfer of final maintenance responsibility for the
roads to the County. It is anticipated that the final agreement
will be accepted by Citrus County in April 1995.

Following the consummation of the Sixth Restatement, the
Company conveyed certain properties to the landlord in
satisfaction of its outstanding lease obligations for its
executive office building in Miami, Florida. The Company also
entered into a modification of its lease agreement, providing for
a reduction of its rental expenses through June 30, 1994, at
which time the Company would have the option of acquiring the
leased premises or reinstating the lease according to its
original terms. Should the landlord sell the leased premises to
a third party at any time that the lease, or any modification
thereof, is in effect, then the lease with the Company would be
cancelled. In December, 1993, the landlord filed suit against the
Company alleging that the Company defaulted in its obligation to
make rental payments under the lease and seeking to accelerate
lease payments. The Company completed a settlement of this
litigation on October 27, 1994 as a result of funds being
advanced under the Second Yasawa Loan and the posting of a letter
of credit by Mr. Antony Gram, Chairman and Chief Executive
Officer of the Company. See "Business: Recent Developments" and
"Legal Proceedings".

The Company placed certain properties in trust to meet its
refund obligation to affected customers. On September 14, 1992,
the Circuit Court of Dade County, Florida approved a settlement
of certain class action litigation instituted by customers
affected by the Marco permit denials, under the terms of which
the Company was required, among other things, to convey more than
120 acres of multi-family and commercial land that had been
placed in trust to the trustee of the 809 member class. As part
of the settlement, the Company guaranteed the amount to be
realized from the sale of the conveyed property. This guaranteed
amount shall not exceed $2,000,000. Such settlement enabled the
Company to resolve the claims of an additional 12.7% of its
affected customers and re-evaluate the allowance for Marco permit
costs. As a result of such analysis, the Company was able to
reduce such allowance by $12,200,000, resulting in a $3,983,000
extraordinary gain in 1992 and a $500,000 credit to accrued
expenses to be credited to paid-in capital following issuance of
250,000 shares of restricted Common Stock of the Company to the
class members. At December 31, 1994, $2,897,000 remained in the
allowance for Marco permit costs, including $578,000 relating to
interest accrued on such obligations. Based upon the Company's
experience with affected customers, the Company believes that its
total obligations to the three remaining affected customers will
not materially exceed the amount provided for in the accompanying
Consolidated Financial Statements.



32



LIQUIDITY

Since 1986, the Company has directed its marketing efforts to
rebuilding retail land sales in an attempt to obtain a more
stable income stream and achieve a balanced growth of retail land
sales and bulk land sales. Retail land sales typically have a
higher gross profit margin than bulk land sales and the contracts
receivable generated from retail land sales provide a continuing
source of income. However, retail land sales also have
traditionally produced negative cash flow through the point of
sale. This is because the marketing and selling expenses have
generally been paid prior to or shortly after the point of sale,
while the land is generally paid for in installments. The
Company's ability to rebuild retail land sales has been
substantially dependent on its ability to sell or otherwise
finance contracts receivable and/or secure other financing
sources to meet its cash requirements.

To alleviate the negative cash flow impact arising from retail
land sales while attempting to rebuild its sales volume, the
Company implemented several new marketing programs which, among
other things, adjusted the method of commission payments and
required larger down payments. However, the nationwide economic
recession, which was especially pronounced in the real estate
industry, adverse publicity surrounding the industry which
existed in 1990, the resulting, more stringent regulatory
climate, and worldwide economic uncertainties have severely
depressed retail land sales beginning in mid-1990 and continuing
thereafter, resulting in a continuing liquidity crisis.

Because of this severe liquidity crisis, the Company ceased
development work late in the third quarter of 1990 and did not
resume development work until the third quarter of 1992. From
September 29, 1990 through the fourth quarter of 1991, when the
Company ceased selling undeveloped lots, sales of undeveloped
lots were accounted for using the deposit method. Under this
method, all payments were recorded as a customer deposit
liability. In addition, because of the increasing trend in
delinquencies during 1990, since the beginning of 1991, the
Company has not recognized any sale until 20% of the contract
sales price has been received. As a result, the reporting and
recognition of revenues and profits on a portion of the Company's
retail land sales contracts is being delayed. See Note 1 to
Consolidated Financial Statements.

The continued economic recession and the increasing adverse
effects of such recession on the Florida real estate industry not
only resulted in the Company's sales remaining at depressed
levels, but caused greater contract cancellations in 1991,
particularly in the second half of the year, than were
anticipated. Such cancellations required the Company to record
an additional provision to its allowance for uncollectible sales
of approximately $12,200,000 in the 1991 third quarter, impacting
net income by approximately $8,900,000. While the Company is
making every effort to reduce its cancellations, should this
trend continue, the Company could be required to record
additional provisions in the future.

The Company had defaulted on its bank debt in the third
quarter of 1990, and was engaged in negotiating the repayment and
restructuring of such debt through 1991 and the first half of
1992. On October 11, 1991, as described above, the Company
completed the first phase of the restructuring of its bank debt
by conveying to the lenders certain real estate assets which had
been held for future development or bulk sales purposes, and on
June 18, 1992, the Company finalized the restructuring of its
remaining bank debt by entering into the Sixth Restatement.

In December, 1992, such bank debt was acquired by Mr. Gram and
assigned to Yasawa. Through the sale of certain assets to Yasawa
and its affiliates, including certain contracts receivable, and
the exercise of the warrants by Yasawa, the Company was able to
reduce such remaining debt from approximately $25,150,000
(including interest and fees) to approximately $5,106,000.
During 1994, the Yasawa Loan was reduced to $4,764,600. The
agreement with Yasawa also provided the Company with a future
line of credit of $1,500,000, all of which was drawn and
outstanding as of December 31, 1994. During 1993, Selex loaned
the Company an additional $5,400,000 pursuant to the Second and
Third Selex Loans, of which $5,323,400 was outstanding as of
December 31, 1994, and Yasawa loaned the Company an additional
$2,122,000 as of December 31, 1994, pursuant to the Second Yasawa


33



Loan. The loans from Selex, Yasawa and their affiliates are
collateralized by substantially all of the Company's assets.

On March 10, 1994, the Company was advised that Selex filed an
Amendment to its Schedule 13D with the Commission. In the
Amendment, Selex reported that it, together with Yasawa and their
affiliates, were uncertain as to whether they would provide any
further funds to the Company. The Amendment further stated that
Selex, Yasawa and their affiliates were seeking third parties to
provide financing for the Company and that as part of any such
transaction, they would be willing to sell or restructure all or
a portion of their loans and Common Stock in the Company.

The Company has stated in previous filings with the Commission
and elsewhere herein that the obtainment of additional funds to
implement its marketing program and achieve the objectives of its
business plan is essential to enable the Company to maintain
operations and continue as a going concern. Since December,
1992, the Company has been dependent on loans and advances from
Selex, Yasawa and their affiliates in order to implement its
marketing program and assist in meeting its working capital
requirements. As previously stated, during the last nine months
of 1993, Selex, Yasawa and their affiliates loaned the Company an
aggregate of $4,400,000 pursuant to Third Selex Loan. Funds
advanced under the Third Selex Loan enabled the Company to
commence implementation of the majority of its marketing program
in the third quarter of 1993. The full benefits of the program
were not realized in 1993 and the Company was unable to secure
financing in 1994 to meet its working capital requirements and
continue its marketing program. However in 1994, Yasawa advanced
("Second Yasawa Loan") a total of $2,122,000 as of December 31,
1994, to meet the Company's minimum working capital requirements,
to pay
settlements with certain trade creditors reducing the Company's
accounts payable by more than $1,000,000 and to settle certain
litigation reducing the Company's exposure in excess of
$5,000,000.

Inasmuch as funding is not presently available to the Company
from external sources and, as stated in their Amendment, Selex,
Yasawa and their affiliates have not determined whether they will
provide any further funds to the Company, the Company is facing a
severe cash shortfall. As a consequence of its liquidity
position, the Company has defaulted on certain obligations,
including its previously described escrow obligations to the
Division pursuant to the Company's 1992 Consent Order and its
obligation to make required interest payments under loans from
Selex, Yasawa and their affiliates. Furthermore, the Company has
not paid certain real estate taxes which aggregate approximately
$2,676,000 as of December 31, 1994 and is also subject to certain
pending litigation filed by former employees, which may adversely
affect the financial condition of the Company. See "Legal
Proceedings."

The Company is continuing to seek third parties to provide
financing. As part of any such transaction, Selex, Yasawa and
their affiliates have indicated that they are willing to sell or
restructure all or a portion of their loans and Common Stock in
the Company. They have also indicated that they are willing to
sell their interests in the Company at a significant discount.
Consummation of any such transaction may result in a change in
control of the Company. There can be no assurance, however, that
such transaction will result or that any financing will be
obtained. Accordingly, the Company's Board of Directors is also
considering other appropriate action given the severity of the
Company's liquidity position including, but not limited, to
filing for protection under the federal bankruptcy laws. See
"Business: Recent Developments", "Legal Proceedings" and Notes 1,
5 and 8 to Consolidated Financial Statements.

34



ITEM 8

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTAL DATA




PAGE
-----


Independent Auditors' Report........................ 36

Consolidated Balance Sheets as of December 31, 1994
and December 31, 1993............................. 37

Statements of Consolidated Operations for the years
ended December 31, 1994, December 31, 1993 and
December 25, 1992.................................. 39

Statements of Consolidated Stockholders' Equity
(Deficiency) for the years ended December 31, 1994,
December 31, 1993 and December 25, 1992............ 40

Statements of Consolidated Cash Flows for the years
ended December 31, 1994, December 31, 1993 and
December 25, 1992.................................. 41

Notes to Consolidated Financial Statements.......... 43

Supplemental Unaudited Quarterly Financial Data..... 60




35




INDEPENDENT AUDITORS' REPORT






TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
THE DELTONA CORPORATION:



We have audited the consolidated balance sheets of The Deltona
Corporation and subsidiaries (the "Company") as of December 31,
1994 and 1993 and the related statements of consolidated
operations, consolidated stockholders' equity (deficiency) and
consolidated cash flows for each of the three years in the period
ended December 31, 1994. These consolidated financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
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 from 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, such consolidated financial statements
referred to above present fairly, in all material respects, the
financial position of the Company at December 31, 1994 and 1993
and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles.

As discussed in Note 2, uncertainty exists as to the Company's
ability to estimate future cancellations of certain contracts and
mortgages receivable sold with recourse and is unable to
determine the adequacy of its reserves to replace or repurchase
receivables that become delinquent. Accordingly, no provision
for any additional reserves that may be necessary upon the
resolution of this matter has been made in the financial
statements.

The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern.
As discussed in Note 1 to the consolidated financial statements,
the Company incurred substantial operating losses during 1994,
1993 and 1992, has continued to experience severe liquidity
crises, causing
the Company to be unable to meet certain contractual obligations,
in some cases resulting in litigation that may have a substantial
impact on the Company, and has a stockholders' deficiency at
December 31, 1994. These matters raise substantial doubt about
the Company's ability to continue as a going concern.
Management's plans concerning these matters are described in Note
1. The consolidated financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.



DELOITTE & TOUCHE LLP
Certified Public Accountants
Miami, Florida
March 24, 1995

36




CONSOLIDATED BALANCE SHEETS

THE DELTONA CORPORATION AND SUBSIDIARIES

ASSETS
(IN THOUSANDS)



DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------


Cash, including escrow deposits and
restricted cast of $2,242 in 1994
and $2,730 in 1993 (Note 7)........ $ 2,440 $ 3,008
------- --------
Contracts receivable for land sales
(Notes 2, 5 and 8).................. 7,830 7,881

Less: Allowance for uncollectible
contracts........................... (1,373) (1,456)

Unamortized valuation discount. (913) (894)
------- --------
Contracts receivable - net........... 5,544 5,531
------- --------

Mortgages and other receivables
- net (Notes 2, 5 and 8)............ 1,243 3,946
------- --------

Inventories, at lower of cost or net
realizable value (Notes 3 and 5):

Land and land improvements........... 11,797 12,443

Other................................ 148 163
------- --------

Total inventories............ 11,945 12,606
------- --------

Property, plant and equipment
- net (Notes 4 and 5)............... 653 1,009
------- --------

Prepaid expenses and other........... 284 465
------- --------

Total........................ $22,109 $ 26,565
======= ========


The accompanying notes are an integral part of the consolidated
financial statements.

37



CONSOLIDATED BALANCE SHEETS

THE DELTONA CORPORATION AND SUBSIDIARIES

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
(IN THOUSANDS EXCEPT SHARE DATA)




DECEMBER 31, DECEMBER 31,
1994 1993
----------- ------------

Mortgages and similar debt (Note 5):

Mortgage notes payable......... $ 14,070 $ 13,284

Other loans.................... 2,500 2,500
-------- --------

Total mortgages and
similar debt..... 16,570 15,784


Accounts payable-trade............ 137 948

Accrued interest payable (Note 5). 2,899 1,570

Accrued taxes, other than income
taxes............................ 2,679 1,518

Accrued expenses and other
(Note 8)......................... 2,559 3,861


Customers' deposits............... 722 1,051


Allowance for Marco permit costs
(Note 9)......................... 2,897 2,886


Deferred revenue (Notes 7 and 8).. 10,467 13,238
-------- --------

Total liabilities................. 38,930 40,856
-------- --------
Commitments and contingencies
(Notes 1, 2, 5, 7, 8, and 9):
Stockholders' equity (deficiency)
(Notes 1, 5, and 10):

Common stock, $1 par value-
authorized 15,000,000 shares;
outstanding: 6,668,765 shares
in 1994 and 5,950,604 shares
in 1993 (excluding 12,228
shares held in treasury)..... 6,669 5,951


Capital surplus............... 42,738 42,080


Accumulated deficit........... (66,228) (62,322)
-------- ---------


Total stockholders' equity
(deficiency).................... (16,821) (14,291)
-------- --------


Total............... $22,109 $ 26,565
======= ========



The accompanying notes are an integral part of the
consolidated financial statements.

38




STATEMENTS OF CONSOLIDATED OPERATIONS
THE DELTONA CORPORATION AND SUBSIDIARIES
(IN THOUSANDS EXCEPT SHARE DATA)



YEARS ENDED
--------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 25,
1994 1993 1992
------------ ------------ ------------

REVENUES

Gross land sales (Note 7). $ 2,994 $ 3,170 $ 2,515
Less: Estimated
uncollectible sales...... (712) (486) (248)
Contract valuation
discount............... (224) (252) (175)
-------- -------- --------
Net land sales............ 2,058 2,432 2,092
Sales-housing............. 2,543 344 -0-
Recognized improvement
revenue-prior period
sales.................... 1,214 4,725 2,404
Interest income........... 1,046 1,197 3,584
Gain on settlement of
lease obligation (Note 8) 1,051 -0- -0-
Other (Note 11)........... 629 3,401 4,137
-------- -------- --------
TOTAL................ 8,541 12,099 12,217
-------- -------- --------

COSTS AND EXPENSES

Cost of sales-land....... 574 656 629
Cost of sales-housing.... 2,169 292 -0-
Cost of improvements-prior
period sales............ 711 3,574 2,048
Cost of sales-other...... 391 1,919 1,928
Provision for uncollectible
contracts............... -0- 2,400 -0-
Commissions, advertising,
and other selling
expenses................ 2,608 6,008 3,917
General and administrative
expenses................ 2,984 3,790 5,844
Real estate tax.......... 1,163 975 1,213
Interest expense.......... 1,847 1,257 3,356
-------- -------- --------
TOTAL................ 12,447 20,871 18,935
-------- -------- --------
LOSS FROM OPERATIONS BEFORE
INCOME TAXES AND
EXTRAORDINARY ITEMS........ (3,906) (8,772) (6,718)
PROVISION FOR INCOME TAXES
(NOTE 6)................... -0- -0- 90
-------- -------- --------

LOSS FROM OPERATIONS
BEFORE EXTRAORDINARY ITEMS.. (3,906) (8,772) (6,808)


EXTRAORDINARY ITEMS:
Gain from debt
restructuring (Note 5).. -0- -0- 10,161
Gain on settlement related
to the Marco refund
obligation (Note 9)..... -0- -0- 3,983
-------- -------- --------
NET INCOME (LOSS)........... $ (3,906) $ (8,772) $ 7,336
======== ======== ========


EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARES
FROM (NOTE 10):
Operations............... $ ( .59) $ (1.45) $ (1.19)
Extraordinary gain....... -0- -0- 2.48
-------- -------- --------
NET INCOME (LOSS).... $ ( .59) $ (1.45) $ 1.29
======== ======== ========


The accompanying notes are an integral part of the
consolidated financial statements.

39


STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY (DEFICIENCY)

THE DELTONA CORPORATION AND SUBSIDIARIES
(IN THOUSANDS)

FOR THE YEARS ENDED DECEMBER 31, 1994, DECEMBER 31, 1993 AND DECEMBER 25, 1992




COMMON STOCK CAPITAL ACCUMULATED
($1 PAR VALUE) SURPLUS DEFICIT
-------------- -------- ------------


BALANCES, DECEMBER 27, 1992... $ 5,661 $ 42,056 $(60,886)
Net proceeds from the
exercise of Warrants...... 290 24 -0-
Net income for the year.... -0- -0- 7,336
-------- -------- --------

BALANCES, DECEMBER 25, 1993... $ 5,951 $ 42,080 $(53,550)
Net (loss) for the year.... -0- -0- (8,772)
-------- -------- --------

BALANCES, DECEMBER 31, 1994.. $ 5,951 $ 42,080 $(62,322)
Net proceeds from exercise
of Warrants.............. 718 698 -0-
Net (loss) for the year... -0- -0- (3,906)
-------- -------- --------

BALANCES, DECEMBER 31, 1994.. $ 6,669 $42,738 $(66,228)
======== ======= ========

The accompanying notes are an integral part of the
consolidated financial statements.

40





STATEMENTS OF CONSOLIDATED CASH FLOWS

THE DELTONA CORPORATION AND SUBSIDIARIES

(IN THOUSANDS)





YEARS ENDED
__________________________________________________

DECEMBER 31, DECEMBER 31, DECEMBER 25,
1994 1993 1992
------------ ------------ ------------


CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from operations:
Proceeds from sale
of residential units.... $ 2,543 $ 344 $ -0-
Collections on contracts
and mortgages receivable. 3,420 1,726 7,192
Proceeds from sale or
transfer of contracts
receivable............. -0- 1,059 8,615
Down payments on and
proceeds from sales
of homesites and tracts. 592 1,517 861
Proceeds from sale of Marco
Trust property........... 22 444 817
Proceeds (uses) from other
sources.................. (44) 262 654
-------- -------- --------
TOTAL CASH RECEIVED
FROM OPERATIONS...... 6,533 5,352 18,139
-------- -------- --------

Cash expended by operations:
Cash expended for
residential units...... 2,169 282 -0-
Cash expended for land
and land improvements... 816 5,028 3,626
Customer refunds......... 136 1,248 1,296
Commissions, advertising
and other selling
expenses............... 2,587 5,331 2,300
General and administrative
expenses................. 2,728 3,806 6,061
Interest paid............. 398 258 153
Real estate taxes paid.... 192 1,030 2,665
-------- -------- --------
TOTAL CASH EXPENDED
BY OPERATIONS......... 9,026 16,983 16,101
-------- -------- --------
NET CASH PROVIDED
BY (USED IN) OPERATING
ACTIVITIES........... (2,493) (11,631) 2,038
-------- -------- --------

CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from sale of
property, plant and
equipment................. 24 493 2,014
Payment for acquisition and
construction of property,
plant and equipment....... (26) (94) (78)
-------- -------- --------
NET CASH PROVIDED BY
(USED IN) INVESTING
ACTIVITIES........... ( 2) 399 1,936
-------- -------- --------

CASH FLOWS FROM FINANCING
ACTIVITIES:
New borrowings.............. 2,122 6,900 3,000
Repayment of borrowings..... (195) (282) (3,504)
-------- -------- --------
NET CASH PROVIDED BY
(USED IN) FINANCING
ACTIVITIES.......... 1,927 6,618 (504)
-------- -------- --------
Net increase (decrease)
in cash and short
term investments.............. (568) (4,614) 3,470
Cash and short term investments,
at beginning of year.......... 3,008 7,622 4,152
-------- -------- --------
Cash and short term investments,
at end of year.......... $ 2,440 $ 3,008 $ 7,622
======== ======== ========


The accompanying notes are an integral part of the
consolidated financial statements.

41



STATEMENTS OF CONSOLIDATED CASH FLOWS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES

(IN THOUSANDS)


RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY (USED
IN) OPERATING ACTIVITIES:




YEARS ENDED
_____________________________________________
DECEMBER 31, DECEMBER 31, DECEMBER 25,
1994 1993 1992
------------ ------------ -----------

Net income (loss)........ $ (3,906) $ (8,772) $ 7,336
---------- ---------- ----------
Adjustments to reconcile
net income (loss) to net
cash provided by (used in)
operating activities:
Depreciation and
amortization....... 86 104 175
Provision for
estimated uncol-
lectible sales..... 712 2,886 248
Contract valuation
discount, net of
amortization......... 19 (255) (3,063)
Net gain on sale of
property, plant and
equipment........... (34) (50) (448)
Extraordinary (gain)
loss from debt
restructuring........ -0- -0- (10,161)
Extraordinary gain
on settlement related
to the Marco refund
obligation........... -0- -0- (3,983)
(Increase) decrease in
assets and increase
(decrease) in liabilities:
Gross contracts
receivable plus
deductions from reserves. (13) (546) 17,547
Mortgages and other
receivables............ 2,513 2,204 (3,483)
Land and land improvements 646 (25) 4,462
Land held for sale or
transfer............ -0- -0- 4,979
Housing completed or
under construction
and other........ 15 1,088 (907)
Prepaid expenses and
other.............. 181 67 371
Accounts payable,
accrued expenses and
other............. 377 (460) (717)
Customers' deposits. (329) (1,605) 1,030
Allowance for Marco
permit costs............ 11 (963) (287)
Deferred revenue......... (2,711) (5,304) (2,137)
---------- ---------- ----------
Total adjustments and
changes............... 1,413 (2,859) (5,298)
---------- ---------- ----------
Net cash provided by
(used in) operating
activities.................. $ 2,493 $ (11,631) $ 2,038
========== ========== ==========


SUPPLEMENTAL DISCLOSURE OF
NON-CASH INVESTING AND
FINANCING ACTIVITIES:

Assets assigned or conveyed
as a reduction of accrued
expenses, mortgages and
notes payable and settlement
of Marco refund obligation:
Contracts and mortgages
receivable (net). . $ 50 $ 708 $ 7,266
========== ========== ==========
Land and land improve-
ments, including land
held for bulk sale or
future development.... $ 202 $ 202 $ 11,522
========== ========== ==========
Property, plant and
equipment.......... $ -0- $ -0- $ 1,338
========== ========== ==========
Reduction of accrued
expenses, mortgages and
notes payable
as a result of assignment
and conveyance agreements. $ -0- $ -0- $ 25,866
========== ========== ==========
Reduction of Allowance for
Marco permit costs in
settlement related to the
Marco refund obligation... $ -0- $ -0- $ 12,182
========== ========== ==========
Common Stock issued for
reduction of long-term
debt.................... $ 1,140 $ -0- $ 341
========== ========== ==========
Common stock issued for
Marco permit costs...... $ 236 $ -0- $ -0-
========== ========== ==========




The accompanying notes are an integral part of the
consolidated financial statements.

42


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

THE DELTONA CORPORATION AND SUBSIDIARIES

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION - GOING CONCERN

The accompanying financial statements of The Deltona
Corporation and subsidiaries (the "Company") have been prepared
on a going concern basis, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of
business.

Although the Company reported net income of $7,336,000 for
1992, primarily due to extraordinary gains of $10,161,000 from
debt restructuring and $3,983,000 from a settlement related to
the Marco refund obligation, such that it was able to reduce the
stockholders' deficiency to $5,519,000 as of December 25, 1992,
the Company incurred a loss from operations for 1992 of
$6,808,000, for 1993 of $8,772,000 and for 1994 of $3,906,000,
resulting in a stockholders' deficiency of $16,821,000 as of
December 31, 1994. The Company has continued to experience
liquidity problems, causing it to be unable to fully implement
its marketing program and to meet certain contractual
obligations, primarily relating to the repayment of debt and the
completion of improvements. The Company must obtain additional
financing to accomplish the objectives of satisfying or
substantially reducing its current debt obligations and provide
the financial stability that will allow the Company to accomplish
the objectives of a successful business plan. These matters
raise substantial doubt about the Company's ability to continue
as a going concern.

Following the completion of the restructuring of its bank debt
in 1992 (see Note 5), the Company commenced the implementation of
its business plan by undertaking a new marketing program which
included the Company's re-entry into the single-family housing
business. To accomplish the objectives of its business plan
required the Company to obtain financing during 1993 and 1994 and
will require the Company to obtain additional financing in 1995.
The transactions described in Note 5 with Selex International
B.V., a Netherlands corporation ("Selex"), Yasawa Holding, N.V.,
a Netherlands Antilles corporation ("Yasawa"), and their
affiliates provided the Company with a portion of its financing
requirements enabling the Company to commence implementation of
the marketing program and attempt to accomplish the objectives of
its business plan, but additional financing will be required in
1995. Selex, Yasawa and their affiliates are uncertain as to
whether they will provide any further funds to the Company.
While the Company, together with Selex, Yasawa and their
affiliates, is seeking third parties to provide financing for the
Company and, as part of any such transaction, Selex, Yasawa and
their affiliates have indicated their willingness to sell or
restructure all or a portion of their loans and Common Stock in
the Company, such financing has not yet become available. As a
consequence of its liquidity position, the Company has defaulted
on certain obligations, including its escrow account obligations
to the State of Florida, Department of Business Regulation,
Division of Land Sales, Condominiums and Mobile Homes (the
"Division") pursuant to the Company's 1992 Consent Order with the
Division (the "1992 Consent Order"), its obligation to pay
certain real estate taxes, and its obligation to make required
interest payments under loans from Selex, Yasawa and their
affiliates. Additionally, the Company is subject to certain
pending litigation by former employees which may adversely affect
the financial condition of the Company (See Notes 5 and 8).

There can be no assurance that the Company will be able to
timely secure the necessary financing to resolve its present
liquidity situation, that the pending litigation will be
favorably concluded, or that a new business plan will be
successfully implemented. Consequently, there can be no assurance
that the Company can continue as a going concern. In the event
that these matters are not successfully addressed, the Company's
Board of Directors will consider other appropriate action given
the severity of the Company's liquidity position, including, but
not limited to, filing for protection under the federal
bankruptcy laws.





43



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES


1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES -
(CONTINUED)


See "Legal Proceedings", "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Notes 5 and 8
to Consolidated Financial Statements.

The consolidated financial statements do not include any
adjustments relating to the recoverability of asset amounts or
the amounts of liabilities should the Company be unable to
continue as a going concern.

SIGNIFICANT ACCOUNTING POLICIES

The Company's consolidated financial statements are prepared
in accordance with generally accepted accounting principles.
Material intercompany accounts and transactions are eliminated.

Since 1986, the Company has used a 52-53 week fiscal year
ending on the last Friday of the year. The year ended December
31, 1993 contained 53 weeks, and the year ended December 25, 1992
contained 52 weeks. The effect on the financial statement of the
extra week in 1993 was not material. Commencing in 1994, the
Company returned to a fiscal year ended December 31.

The Company sells homesites under installment contracts which
provide for payments over periods ranging from 2 to 10 years.
Sales of homesites are recorded under the
percentage-of-completion method in accordance with Statement of
Financial Accounting Standards No. 66, "Accounting for Sales of
Real Estate" ("FASB No. 66"). Since 1991, the Company has not
recognized a sale until it has received 20% of the contract sales
price.

Because of the severe liquidity crisis faced by the Company as
discussed above, the Company ceased development work late in the
third quarter of 1990. From September 29, 1990 through the
fourth quarter of 1991, all sales of undeveloped lots were
accounted for using the deposit method. Since the fourth quarter
of 1991 and in compliance with the 1992 Consent Order, the
Company has been offering only developed lots for sale (see Note
8).

At the time of recording a sale the Company records an
allowance for the estimated cost to cancel the related contracts
receivable through a charge to the provision for uncollectible
sales. The amount of this provision and the adequacy of the
allowance is determined by the Company's continuing evaluation of
the portfolio and past cancellation experience. While the
Company uses the best information available to make such
evaluations, future adjustments to the allowance may be necessary
as a result of future national and international economic and
other conditions that may be beyond the Company's control.
Changes in the Company's estimate of the allowance for previously
recognized sales will be reported in earnings in the period in
which they become estimable and are
charged to the provision for uncollectible contracts.

Land improvement costs are allocated to individual homesites
based upon the relationship that the homesite's sales price bears
to the total sales price of all homesites in the community. The
estimated costs of improving homesites are based upon independent
engineering estimates made in accordance with sound cost
estimation and provide for anticipated cost-inflation factors.
The estimates are systematically reviewed. When cost estimates
are revised, the percentage relationship they bear to deferred
revenues is recalculated on a cumulative basis to determine
future income recognition as performance takes place.

44




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES



1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES -
(CONTINUED)


Bulk land sales are recorded and profit is recognized in
accordance with FASB No. 66. Bulk land sales of approximately
$315,000, $113,000 and $226,000 are included in gross land sales
for the years ended December 31, 1994, December 31, 1993 and
December 25, 1992, respectively.

Sales of houses and vacation ownership units, as well as all
related costs and expenses, are recorded at the time of closing.


Interest costs directly related to, and incurred during, a
project's construction period are capitalized. Such capitalized
interest amounted to $-0-, $164,000 and $100,000 for the years
ended December 31, 1994, December 31, 1993 and December 25, 1992,
respectively.

Property, plant and equipment is stated at cost. Depreciation
is provided by the straight-line method over the estimated useful
lives of the respective assets. Additions and betterments are
capitalized, and maintenance and repairs are charged to income as
incurred. Generally, upon the sale or retirement of assets, the
accounts are relieved of the costs and related accumulated
depreciation and any gain or loss is reflected in income.

When property exchanges and refund transactions are
consummated under the Company's Marco Island-Marco Shores
customer programs (see Note 9), any resulting loss is charged to
the allowance for Marco permit costs. When property exchanges and
refund transactions are consummated under the Consent Order (see
Note 8), any resulting loss is charged against the allowance
included in accrued expenses and other. The Company accrues
interest on its refund obligations in accordance with the various
customer refund programs.

For the purposes of the statements of cash flows, the Company
considers its investments, which are comprised of short term,
highly liquid investments purchased with a maturity of three
months or less, to be cash equivalents.

Certain amounts in the 1992 financial statements have been
reclassified for comparative purposes to the 1993 and 1994
presentation.


45



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES

2. CONTRACTS AND MORTGAGES RECEIVABLE

At December 31, 1994, interest rates on contracts receivable
outstanding ranged from 5.0% to 12.0% per annum (weighted average
approximately 8.4%). The approximate principal maturities of
contracts receivable (including $50,470 restricted for use in the
Marco refund program, see Note 9) were:



DECEMBER 31,
1994
------------
(IN THOUSANDS)

1995................................... $ 1,074
1996................................... 1,139
1997................................... 1,188
1998................................... 1,219
1999................................... 1,040
2000 and thereafter.................... 2,170
---------
Total................... $ 7,830
=========


If a regularly scheduled payment on a contract remains unpaid
30 days after its due date, the contract is considered
delinquent. Aggregate delinquent contracts receivable at
December 31, 1994 and December 31, 1993 approximate $2,140,000
and $1,717,000, respectively.

Information with respect to interest rates and average
contract lives used in valuing new contracts receivable generated
from sales follows:




AVERAGE AVERAGE STATED DISCOUNTED
YEARS ENDED TERM INTEREST RATE TO YIELD
----------- ------- -------------- ----------

December 31, 1994......... 92 months 8.4% 13.5%
December 31, 1993......... 98 months 7.8% 13.5%
December 25, 1992......... 111 months 8.4% 13.5%



In December, 1992, as described above, the Company sold
$10,800,000 of contracts and mortgages receivable to an affiliate
of Yasawa at face value, applying the proceeds therefrom to
reduce the Bank Loan acquired by Yasawa.

In March, 1993 the Company transferred $1,600,000 in
contracts and mortgages receivable generating approximately
$1,059,000 in proceeds to the Company, which was used for working
capital and the creation of a holdback account in the amount
$150,000. As of December 31, 1994, the balance of the holdback
account was $107,000.

In June, 1992 and February, 1990, the Company completed
sales of contracts and mortgages receivable totalling $13,500,000
and $17,000,000, respectively, which generated approximately
$8,000,000 and $13,900,000, respectively, in net proceeds to the
Company. The anticipated costs of the June, 1992 transaction
were included in the extraordinary loss from debt restructuring
for 1991 since the restructuring was dependent on the sale. The
Company recorded a loss of $600,000 on the February, 1990 sale.
In conjunction with these sales the Company granted the purchaser
a security interest in certain additional contracts receivable of
approximately $2,700,000 and conveyed all of its rights, title
and interest in the property underlying such contracts to a
collateral trustee. In addition, these transactions, among other
things require that the Company replace or repurchase any
receivable that becomes 90 days delinquent upon the request of
the purchaser. Such requirement can be satisfied from contracts
in which the purchaser holds a security interest (approximately
$1,297,000 as of December 31, 1994). The

46



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES


2. CONTRACTS AND MORTGAGES RECEIVABLE - (CONTINUED)

purchaser of these receivables has experienced financial
difficulty and filed in 1994 for protection under Chapter 11 of
the Federal Bankruptcy Code. The Company is unable to determine
what effect this will have, if any, on future cancellations,
since it is unable to determine how the bankruptcy will impact
servicing and collection procedures and the customers'
determination to continue to pay under those contracts. The
Company has fully reserved for the amount of the holdback account
and the estimated future cancellations based on the Company's
historical experience for receivables the Company services.
However, due to the uncertainty noted above, the Company does not
feel there is sufficient information to estimate future
cancellations and is unable to determine the adequacy of its
reserves to replace or repurchase receivables that become
delinquent. The Company was unable to replace or repurchase
$1,148,000 in delinquent contracts in 1994, which amount was
deducted from the deposit held by the purchaser of the
receivables as security.

The Company was the guarantor of approximately $25,608,000
of contracts receivable sold or transferred as of December 31,
1994, for the transactions described above, had $775,000 on
deposit with purchasers of the receivables as security to assure
collectibility as of such date and had established $775,000 as a
liability for the Company's obligation under the recourse
provisions. The Company has been in compliance with all
receivable transactions since the consummation of sales.

The Company anticipates that it will be necessary to
complete additional sales and financings of a portion of its
receivables in 1995. There can be no assurance, however, that
such sales and/or financings can be accomplished.

On July 24, 1991, the Company assigned mortgages receivable,
including accrued interest and payments collected thereon from
December 1990 through July 1991, of approximately $6,400,000 to
its principal lending banks to be applied to reduce its
outstanding bank debt. (See Note 5)

3. INVENTORIES

Information with respect to the classification of inventory of
land and improvements including land held for sale or transfer is
as follows:



DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------
(IN THOUSANDS)

Unimproved land....... $ 444 $ 444
Land in various stages of development. 4,014 4,888
Fully improved land................... 7,339 7,111
-------- --------
Total................. $ 11,797 $ 12,443
======== ========


Land and land improvements include approximately $202,000 of
land placed in the Marco Island and Marco Shores trusts for the
Marco refund program as of December 31, 1994 and December 31,
1993 (see Note 9). Other inventories consists primarily of
vacation ownership units completed (see Note 5).

47



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment and accumulated depreciation
consist of the following:





DECEMBER 31, 1994 DECEMBER 31, 1993
---------------- -----------------
ACCUMULATED ACCUMULATED
COST DEPRECIATION COST DEPRECIATION
----- ------------ ----- -----------
(IN THOUSANDS)

Land and land
improvements. $ 128 $ -0- $ 143 $ -0-
Other buildings,
improvements and
furnishings....... 1,449 983 1,954 1,250
Construction and other
equipment........... 1,492 1,433 1,661 1,543
Construction work
in progress.... -0- -0- 44 -0-
------- ------- ------- -------
Total........ $ 3,069 $ 2,416 $ 3,802 $ 2,793
======= ======= ======= =======



Depreciation charged to operations for the years ended
December 31, 1994, December 31, 1993 and December 25, 1992 was
approximately $86,000, $104,000 and $175,000, respectively.

5. MORTGAGES AND SIMILAR DEBT

Indebtedness under various purchase money mortgages and loan
agreements is collateralized by substantially all of the
Company's assets, including stock of certain wholly-owned
subsidiaries.

The following table presents information with respect to
mortgages and similar debt (in thousands):



DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------

Mortgage Notes Payable ... $ 14,070 $ 13,284
Other Loans............... 2,500 2,500
-------- --------
Total Mortgages and
Similar Debt. $ 16,570 $ 15,784
======== ========


Included in Mortgage Notes Payable is the $3,000,000 First
Selex Loan ($1,860,000 as of December 31, 1994), the $1,000,000
Second Selex Loan ($961,000 as of December 31, 1994), the
$4,400,000 Third Selex Loan ($4,362,400 as of December 31, 1994),
and the $4,900,000 Yasawa Loan ($4,764,600 as of December 31,
1994) and the Second Yasawa Loan ($2,122,000 as of December 31,
1994). Other loans include the $1,000,000 Empire note and the
$1,500,000 Scafholding Loan.

These mortgage notes payable and other loans are in default as
of December 31, 1994 due to the non-payment of interest and
principal. The lenders have not taken any action as a result of
these defaults.


48




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES


5. MORTGAGES AND SIMILAR DEBT - (CONTINUED)

On June 19, 1992, Selex loaned the Company the sum of
$3,000,000 pursuant to the First Selex Loan. The First Selex
Loan is collateralized by a first mortgage on certain of the
Company's unsold, undeveloped property in its St. Augustine
Shores, Florida community. The Loan matures on June 15, 1996 and
provides for principal to be repaid at 50% of the net proceeds
per lot for lots requiring release from the mortgage, with the
entire unpaid balance becoming due and payable at the end of the
four year term. It initially bears interest at the rate of 10%
per annum, with payment of interest deferred for the initial 18
months of the Loan and interest payments due quarterly
thereafter. As part of the Selex transaction, Selex was granted
an option, approved by the holders of a majority of the
outstanding shares of the Company's Common Stock at the Company's
1992 Annual Meeting, which, as modified, enabled Selex to convert
the First Selex Loan, or any portion thereof, into a maximum of
600,000 shares of the Company's Common Stock at a per share
conversion price equal to the greater of (i) $1.25 or (ii) 95% of
the market price of the Company's Common Stock at the time of
conversion, but in no event greater than $4.50 per share (the
"Option"). On February 17, 1994, Selex exercised the Option, in
full, at a conversion price of $1.90 per share, such that
$1,140,000 in principal was repaid under the First Selex Loan
through such conversion. As of March 24, 1995, the Company was
in default of the First Selex Loan inasmuch as accrued interest
in the amount of $716,700 (including $673,800 due December 31,
1994) remained unpaid.

One million dollars of the proceeds from the First Selex Loan
was used by the Company to acquire certain commercial and
multi-family properties at the Company's St. Augustine Shores
community at their net appraised value, from Mr. Muyres and
certain entities affiliated with Messrs. Zwaans and Muyres.
Namely, (i) $416,000 was used to acquire 48 undeveloped
condominium units (twelve 4 unit building sites) and 4 completed
(and rented) condominium units from Conquistador, in which
Messrs. Zwaans and Muyres serve as directors, as well as
President and Secretary/Treasurer, respectively; (ii) $485,000
was used to acquire 4 commercial lots from Swan Development
Corporation, in which Messrs. Zwaans and Muyres also serve as
directors, as well as President and Secretary, respectively; and
(iii) approximately $99,000 was used to reacquire, from Mr.
Muyres, all of his rights, title and interest in that certain
contracts with the Company for the purchase of a commercial tract
in St. Augustine Shores, Florida. None of the commercial and
multi-family property acquired by the Company from Mr. Muyres and
certain entities affiliated with Messrs. Zwaans and Muyres
collateralizes the First Selex Loan. In March, 1994,
Conquistador exercised its right to repurchase certain
multi-family property from the Company (which right had been
granted in connection with the June, 1992 Selex transaction) at a
price of $312,000, of which $260,000 was paid in cash to the
Company and $52,000 was applied to reduce interest due to Selex
under the Second Selex Loan ("First Conquistador Acquisition").

On December 2, 1992, the Company entered into various
agreements relating to certain of its assets and the
restructuring of its debt with Yasawa, which is beneficially
owned by Mr. Gram. The consummation of these agreements, which
are further described below, was conditioned upon the acquisition
by Gram of the Company's outstanding bank loan.

On December 4, 1992, Gram entered into an agreement with the
lenders, pursuant to which he acquired the bank loan of
approximately $25,150,000 (including interest and fees) for a
price of $10,750,000. In conjunction with such transaction, the
lenders transferred to Gram the warrants which they held that
entitled the holder to purchase an aggregate of 277,387 shares of
the Company's Common Stock at an exercise price of $1.00 per
share. Immediately after the acquisition of the bank loan, Gram
transferred all of his interest in the bank loan, including the
warrants, to Yasawa.


49




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES


5. MORTGAGES AND SIMILAR DEBT - (CONTINUED)

On December 11, 1992, the Company consummated the December 2,
1992 agreements with Yasawa. Under these agreements, Yasawa, its
affiliates and the Company agreed as follows: (i) the Company
sold certain property at its Citrus Springs community to an
affiliate of Yasawa in exchange for approximately $6,500,000 of
debt reduction credit; (ii) an affiliate of Yasawa and the
Company entered into a joint venture agreement with respect to
the Citrus Springs property, providing for the Company to market
such property and receive an administration fee from the venture
(in March, 1994, the Company and the affiliate agreed to
terminate the venture); (iii) the Company sold certain contracts
receivable at face value to an affiliate of Yasawa for debt
reduction credit of approximately $10,800,000; (iv) the Company
sold the Marco Shores Country Club and Golf Course to an
affiliate of Yasawa for an aggregate sales price of $5,500,000,
with the affiliate assuming an existing first mortgage of
approximately $1,100,000 and the Company receiving debt reduction
credit of $2,400,000, such that the Company obtained cash
proceeds from this transaction of $2,000,000, which amount was
used for working capital; (v) an affiliate of Yasawa agreed to
lease the Marco Shores Country Club and Golf Course to the
Company for a period of approximately one year; (vi) an affiliate
of Yasawa and the Company agreed to amend the terms of the
warrants to increase the number of shares issuable upon their
exercise from 277,387 shares to 289,637 shares and to adjust the
exercise price to an aggregate of approximately $314,000; (vii)
Yasawa exercised the warrants in exchange for debt reduction
credit of approximately $314,000; (viii) Yasawa released certain
collateral held for the bank loan; (ix) an affiliate of Yasawa
agreed to make an additional loan of up to $1,500,000 to the
Company, thus providing the Company with a future line of credit
(all of which was drawn and outstanding as of March 24, 1995);
and (x) Yasawa agreed to restructure the payment terms of the
remaining $5,106,000 of the bank loan as a loan from Yasawa (the
"Yasawa Loan").

The Yasawa Loan bears interest at the rate of 11% per annum,
with payment of interest deferred until December 31, 1993, at
which time only accrued interest became payable. Commencing
January 31, 1994, principal and interest became payable monthly,
with all unpaid principal and accrued interest being due and
payable on December 31, 1997. During 1994, an assignment of a
mortgage receivable and miscellaneous sales of collateral reduced
the Yasawa Loan to $4,765,000 as of December 31, 1994. As of
March 24, 1995, $5,418,300 in principal and accrued interest was
in default under the Yasawa Loan.

On April 30, 1993 Selex loaned the Company an additional
$1,000,000 collateralized by a first mortgage on certain of the
Company's property in its Marion Oaks, Florida community (the
"Second Selex Loan"). The Second Selex Loan bears interest at
11% per annum, with interest deferred until December 31, 1993.
The Second Selex Loan provides for principal to be repaid at
$3,000 per lot for lots requiring release from the mortgage, with
the entire unpaid principal balance and interest accruing from
January 1, 1994 to April 30, 1994 due and payable on April 30,
1994. Although Selex had certain conversion rights under the
Second Selex Loan in the event the Company sold any Common Stock
or Preferred Stock prior to payment in full of all amounts due to
Selex under the Second Selex Loan, such rights were voided as of
December 31, 1993. As of March 24, 1995, $39,000 in principal
and $52,000 in accrued interest had been repaid under the Second
Selex Loan, but accrued interest of $154,600 due under the Loan
as of March 24, 1995, as well as the principal balance of
$961,000, remained unpaid and in default. The Second
Conquistador Acquisition, discussed below, will, when closed,
satisfy the debt due and payable under the Second Selex Loan.

50




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES


5. MORTGAGES AND SIMILAR DEBT - (CONTINUED)

From July 9, 1993 through December 31, 1993, Selex loaned the
Company an additional $4,400,000 collateralized by a second
mortgage on certain of the Company's property on which Selex
and/or Yasawa hold a first mortgage pursuant to a Loan Agreement
dated July 14, 1993 and amendments thereto (the "Third Selex
Loan"). The Third Selex Loan bears interest at 11% per annum,
with interest deferred until December 31, 1993. Principal is to
be repaid at $3,000 per lot for lots requiring release from the
mortgage, with the entire unpaid principal balance and interest
accruing from January 1, 1994 to April 30, 1994 due and payable
on April 30, 1994. As of March 24, 1995, $37,600 in principal
had been repaid under the Third Selex Loan, but accrued interest
of $742,600 due under the Loan as of March 24, 1995, as well as
the principal balance of $4,362,400, remained unpaid and in
default. The Second Conquistador Acquisition, discussed below,
will, when closed, provide a reduction of the debt due and
payable under the Third Selex Loan.

In February, 1994, Yasawa loaned the Company an additional
amount of approximately $514,900 at an interest rate of 8% per
annum (the "Second Yasawa Loan"). Since May, 1994, additional
amounts were advanced to the Company under the Second Yasawa Loan
to enable the Company to pay certain essential expenses and to
effectuate settlements with the Company's principal creditors.
As of March 24, 1995, an aggregate amount of $2,242,000 had been
advanced to the Company under the Second Yasawa Loan and $115,600
in accrued interest remains unpaid.

The Company has approved a Purchase and Sale Agreement with
Conquistador Development Corporation ("Second Conquistador
Acquisition") for the sale of an administration building and
multi-family site in the Company's St. Augustine Shores community
as well as the remaining lot inventory in the Company's Feather
Nest community at Marion Oaks in consideration for the
satisfaction of $2,599,300 of principal and accrued interest on
the Second and Third Selex Loans. The amount of debt reduction
is equivalent to the amount of Mr. Marcel Muyres' participation
in those loans as of January 31, 1995. In a separate
transaction, Conquistador Development Corporation and the Company
approved a Purchase and Sale Agreement ("Third Conquistador
Acquisition") for the sale of four single family residential lots
in the St. Augustine Shores community for $100,000 in cash. The
Second and Third Conquistador Acquisitions are anticipated to
close by April 30, 1995.

As previously stated, Messrs. Muyres and Zwaans also serve as
directors and executive officers of M&M. The Company has leased
certain office space to M&M at its St. Augustine Shores community
pursuant to a Lease Agreement dated August 10, 1990. Although
the aggregate annual rental payments under such Lease are less
than $60,000, as of March 24, 1995, M&M was in default of its
obligations under the Lease inasmuch as delinquent rental
payments (including reimbursement for real estate taxes) of
approximately $21,260 remain unpaid. Payment of delinquent
rental payments will be made upon closing of the Second
Conquistador Acquisition.

Interest due to Selex, Yasawa and their affiliates as of
December 31, 1994 in the aggregate amount of $2,899,500 remained
unpaid and in default as of March 24, 1995. Through March 24,
1995, $1,140,000 in principal was repaid under the First Selex
Loan through the exercise of the above described Option, $39,000
in principal and $52,000 in accrued interest was repaid under the
Second Selex Loan, $37,600 in principal was repaid under the
Third Selex Loan, and $133,900 in principal and $346,000 in
accrued interest was repaid under the Yasawa loan. As of March
24, 1995, the Company had loans outstanding from Selex, Yasawa
and their affiliates in the aggregate amount of approximately
$19,999,400 including interest, all of which are in default,
including approximately $10,359,600, which is owed to Selex,
including accrued and unpaid interest of approximately


51




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES


5. MORTGAGES AND SIMILAR DEBT - (CONTINUED)

$2,176,200 (10% per annum on the First Selex Loan, 11% per annum
on the Second and Third Selex Loans and 12% per annum on the
$1,000,000 Empire Note assigned to Selex); approximately
$7,776,000, which owed to Yasawa, including accrued and unpaid
interest of approximately $769,200 (11% per annum on the Yasawa
Loan and 8% per annum on the Second Yasawa Loan); and
approximately $1,864,000, which is owed to an affiliate of
Yasawa, including accrued and unpaid interest of approximately
$364,000 (12% per annum). The loans from Selex, Yasawa and their
affiliates are secured by substantially all of the assets of the
Company.

6. INCOME TAXES

For 1992, the Company had income before consideration of any
net operating loss carryforwards for book purposes. Deferred
taxes were provided for alternative minimum tax. The deferred
provision for 1992 for alternative minimum tax resulted from the
enactment of the alternative minimum tax provisions under the Tax
Reform Act of 1986. Under these federal income tax provisions, a
corporation may offset only 90% of its alternative minimum
taxable income with net operating loss carryovers.

Prior to December 26, 1992, the Company accounted for income
taxes in accordance with Accounting Principles Board Opinion No.
11. Effective December 26, 1992, the Company adopted Statement of
Accounting Standard No. 109 "Accounting for Income Taxes." There
was no effect from the adoption of this standard. Under this
standard deferred income assets and liabilities are computed
annually for the difference between financial statements and the
tax bases of assets and liabilities that will result in taxable
or deductible amounts in the future bases on enacted tax and
rates applicable to periods in which the differences are expected
to affect taxable income. Income tax expense is the tax payable
or refundable for the period plus or minus the change during the
period in deferred assets and liabilities.

For the years ended December 31, 1994 and 1993, the Company
had a net loss for tax purposes and, as a result, there was no
tax payable or refundable and there was no change in the net
deferred tax asset. Accordingly, there was no tax provision for
such years.

As of December 31, 1993, the Company had a net deferred tax
asset of approximately $25,564,000 which primarily resulted from
the tax effect of the Company's net operating loss carryforward
of $21,719,000 and losses on subsidiaries sold in prior years of
$3,944,000. A valuation allowance of $25,564,000 has been
established against the net deferred tax asset.

As of December 31, 1994, the Company had a net deferred tax
asset of approximately $25,437,000 which primarily resulted from
the tax effect of the Company's net operating loss carryforward
of $21,289,000 and losses on subsidiaries sold in prior years of
$3,960,000. A valuation allowance of $25,437,000 has been
established against the net deferred tax asset.

The Company's regular net operating loss carryover for tax
purposes is estimated to be $55,182,000 at December 31, 1994, of
which $6,555,000 will be available through 1995, $4,733,000
through 1996, $11,022,000 through 1999, $364,000 through 2002,
$9,189,000 through 2005, $9,780,000 through 2006, and the
remainder through 2009. In addition to the net operating loss
carryover, investment tax credit carryovers of approximately
$259,000, which expire from 1994 through 2001, are available to
reduce federal income tax liabilities only after the net
operating loss carryovers have been utilized.

52



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES


6. INCOME TAXES - (CONTINUED)

The utilization of the Company's net operating loss and tax
credit carryforwards would be impaired or reduced under certain
circumstances, pursuant to changes in the federal income tax laws
effected by the Tax Reform Act of 1986. Events which affect
these carryforwards include, but are not limited to, cumulative
stock ownership changes of 50% or more over a three-year period,
as defined, and the timing of the utilization of the tax benefit
carryforwards.

7. LIABILITY FOR IMPROVEMENTS

The Company has an obligation to complete land improvements
upon deeding which, depending on contractual provisions,
typically occurs within 90 to 120 days after the completion of
payments by the customer. The estimated cost to complete
improvements to lots and tracts at December 31, 1994 and December
31, 1993 was approximately $17,600,000 and $18,574,000 (as
adjusted for the 1992 Consent Order), respectively. The foregoing
estimates reflect the Company's current development plans at its
communities (see Note 8). These estimates include estimated
development obligations applicable to sold lots of approximately
$2,412,000 and $2,825,000, respectively, a liability to provide
title insurance and deeding costing $1,300,000 and $951,000,
respectively, and an estimated cost of street maintenance, prior
to assumption of such obligations by local governments, of
$2,948,000 and $3,852,000, respectively, all of which are
included in deferred revenue. Included in cash at December 31,
1994 and December 31, 1993, are escrow deposits of $911,000 and
$1,664,000, respectively, restricted for completion of
improvements in certain of the Company's communities.

In May, 1994 the Company implemented a program to exchange
purchasers who contracted to purchase property which is
undeveloped to property which is developed. As of March 24,
1995, approximately 75% of the customers whose lots are currently
undeveloped have opted to exchange. The Company's goal is to
eliminate its development obligation (with the exception of its
maintenance obligation in Marion Oaks) under the 1992 Consent Order
through this exchange program, completion of two commercial areas in
Marion Oaks, sale of its second Citrus Springs Golf Course (with the buyer
assuming the development obligation) and settlement of all remaining
maintenance and improvements obligations in Citrus Springs
through a final agreement with Citrus County (scheduled for
approval in April 1995).

The anticipated expenditures for land improvements to complete
areas from which sales have been made through December 31, 1994
are as follows:




DECEMBER 31, 1994
-----------------
(IN THOUSANDS)

1995................................. $ 1,399
1996................................. 1,781
1997................................. 4,853
1998................................. 9,567
-------
Total................ $17,600
=======




8. COMMITMENTS AND CONTINGENT LIABILITIES

Total rental expense for the years ended December 31, 1994,
December 31, 1993 and December 25, 1992 was approximately
$773,000, $808,000 and $1,164,000, respectively.

53




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES


8. COMMITMENTS AND CONTINGENT LIABILITIES - (CONTINUED)

The Company has no real estate leases that extend beyond 1995.
Estimated rental expense under these leases is expected to be
approximately $175,000. The Company has no material equipment
leases.

During 1983 the Company entered into a sale-leaseback
agreement on its executive office building. Following the
consummation of the Sixth Restatement, the Company conveyed
certain properties to the landlord in satisfaction of its
outstanding lease obligations for its executive office building
in Miami, Florida. The Company also entered into a modification
of its lease agreement, providing for a reduction of its rental
expenses through June 30, 1994, at which time the Company would
have the option of acquiring the leased premises or reinstating
the lease according to its original terms. If the landlord were
to sell the leased premises to a third party at any time that the
lease, or any modification thereof, is in effect, then the lease
with the Company would be cancelled. In the action styled FIVE
POINTS LIMITED V. THE DELTONA CORPORATION, Case No. 93-22877,
filed in the Circuit Court for Dade County, Florida and served
upon the Company on December 8, 1993, the plaintiff sought
damages against the Company for an alleged breach of the lease
for its office building. The complaint alleged that the Company
had defaulted on its obligation to make payments under the lease
and sought damages in excess of $272,000 for additional past due
rent, plus damages for acceleration of lease payments in excess
of $4,000,000. On February 17, 1994 the Court entered an Order
requiring the Company to pay uncontested back rent of
approximately $240,000, plus uncontested monthly rents of
approximately $48,000, commencing on March 1, 1994. As of
December 31, 1994, approximately $41,500 had been garnished by
the Court under this Order. The Plaintiff has obtained multiple
judgments in the amount of $647,000 as of December 31, 1994.
These judgments have been recorded in certain of the Company's
communities. As set forth in the Company's filing on September
1, 1994 of its Form 10-K for the fiscal year ended December 31,
1993, the Company had entered into a Settlement Agreement with
the plaintiff which needed to be consummated on or before October
17, 1994. The Company also stated that new financing would be
required to consummate the settlement agreement and that failure
to fund this agreement would result in continued litigation and a
likely substantial judgement against the Company. The settlement
agreement was consummated on October 27, 1994 as a result of
funds being advanced by Yasawa and the posting of a letter of
credit by Mr. Antony Gram, Chairman and Chief Executive Officer
of the Company.

The profit on the sale-leaseback agreement was included in
deferred revenue and amortized as a reduction in rent expense
over the term of the lease which, according to its terms would
expire March 31, 1998. At December 31, 1993, $1,205,000 of the
profit remained in deferred revenue. On October 27, 1994, the
date on which the above referenced settlement agreement was
consummated, all of the profit remaining in deferred revenue was
recognized resulting in a gain of $1,051,000.

Homesite sales contracts provide for the return of all monies
paid in (including paid-in interest) should the Company be unable
to meet its contractual obligations after the use of reasonable
diligence. If a refund is made, the Company will recover the
related homesite and any improvement thereto. The aggregate
amount of all monies paid in (including paid-in interest) on all
homesite contracts having outstanding contractual obligations
(primarily to complete improvements) at December 31, 1994 was
approximately $7,343,200.

54




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES


8. COMMITMENTS AND CONTINGENT LIABILITIES - (CONTINUED)

As a result of the delays in completing the land improvements
to certain property sold in certain of its Central and North
Florida communities, the Company fell behind in meeting its
contractual obligations to its customers. In connection with
these delays, the Company, in February, 1980, entered into a
Consent Order with the Division which provided a program for
notifying affected customers. The Consent Order, which was
restated and amended, provided a program for notifying affected
customers of the anticipated delays in the completion of
improvements (or, in the case of purchasers of unbuildable lots
in certain areas of the Company's Sunny Hills community, the
transfer of development obligations to core growth areas of the
community); various options which may be selected by affected
purchasers; a schedule for completing certain improvements; and a
deferral of the obligation to install water mains until requested
by the purchaser. Under an agreement with Topeka, Topeka's
utility companies have agreed to furnish utility service to the
future residents of the Company's communities on substantially
the same basis as such services were provided by the Company.
The Consent Order also required the establishment of an
improvement escrow account as assurance for completing such
improvement obligations. In June, 1992, the Company entered into
the 1992 Consent Order with the Division, which replaced and
superseded the original Consent Order, as amended and restated.
Among other things, the 1992 Consent Order consolidated the
Company's development obligations and provided for a reduction in
its required monthly escrow obligation to $175,000 from
September, 1992 through December, 1993. Beginning January, 1994
and until development is completed or the 1992 Consent Order is
amended, the Company is required to deposit $430,000 per month
into the escrow account. To meet its current escrow and
development obligations under the 1992 Consent Order, the Company
is required to deposit into escrow $5,160,000 in 1994 and
$3,519,000 in 1995. As part of the assurance program under the
1992 Consent Order, the Company and its lenders granted the
Division a lien on certain contracts receivable (approximately
$7,528,000 as of December 31, 1994) and future receivables. The
Company defaulted on its obligation to escrow $430,000 per month
for the period of January, 1994 through the present and, in
accordance with the 1992 Consent Order, collections on Division
receivables were escrowed for the benefit of purchasers from
March 1, 1994 through April 30, 1994. In May, 1994 the Company
implemented a program to exchange purchasers who contracted to
purchase property which is undeveloped to property which is
developed. As of March 24, 1995, approximately 75% of the
customers whose lots are currently undeveloped have opted to
exchange. The Company's goal is to eliminate its development
obligation (with the exception of its maintenance obligation in
Marion Oaks) under the 1992 Consent Order through this exchange
program, completion of two commercial areas in Marion Oaks, sale
of its second Citrus Springs Golf Course (with the buyer assuming
the development obligation) and settlement of all remaining
maintenance and improvements obligations in Citrus Springs
through a final agreement with Citrus County (scheduled for
approval in April 1995). Consequently, the Division has allowed
the Company to utilize collections on receivables since May 1,
1994. Pursuant to the 1992 Consent Order, the Company has
limited the sale of single-family lots to lots which front on a
paved street and are ready for immediate building. Because of
the Company's default, the Division could also exercise other
available remedies under the 1992 Consent Order, which remedies
entitle the Division, among other things, to halt all sales of
registered property. As of December 31, 1994, the Company had
estimated development obligations of approximately $2,412,000 on
sold property, an estimated liability to provide title insurance
and deeding costing $1,300,000 and an estimated cost of street
maintenance, prior to assumption of such obligations by local
governments, of $2,948,000, all of which are included in deferred
revenue. The total cost, including the previously mentioned
obligations, to complete improvements at December 31, 1994 to
lots subject to the 1992 Consent Order and to lots in the St.
Augustine Shores community was estimated to be approximately
$17,600,000. As of December 31, 1994 and December 31, 1993 the
Company had in escrow approximately $911,000 and $1,664,000,
respectively, specifically for land improvements at certain of
its Central and North Florida communities.

55



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES


8. COMMITMENTS AND CONTINGENT LIABILITIES - (CONTINUED)

Based upon the Company's experience with affected customers,
the Company believes that the total refunds arising from delays
in completing such improvements will not materially exceed the
amount provided for in the consolidated financial statements.
Approximately $49,000 and $64,000 of the provision for the total
refunds relating to the delays of improvements remained in
accrued expenses and other at December 31, 1994 and December 31,
1993, respectively.

The Company's corporate performance bonds to assure the
completion of development at its St. Augustine Shores community
expired in March and June, 1993. Such bonds cannot be renewed
due to a change in the policy of the Board of County
Commissioners of St. Johns County which precludes allowing any
developer to secure the performance of development obligations by
the issuance of corporate bonds. In the event that St. Johns
County elects to undertake the completion of such development
work, the Company would be obligated with respect to 1,000
improved lots at St. Augustine Shores in the amount of
approximately $6,200,000. The Company intends to submit an
alternative assurance program for the completion of such
development and improvements to the County for its approval.

In addition to the matters discussed above and in Note 9, the
Company is a party to other litigation relating to the conduct of
its business which is routine in nature and, in the opinion of
management, should have no material effect upon the Company's
operation. See "Legal Proceedings".

9. MARCO ISLAND-MARCO SHORES PERMITS

On April 16, 1976, the U.S. Army Corps of Engineers (the
"Corps") denied the Company's application for dredge and fill
permits required to complete development of the Marco Island
community. These denials adversely affected the Company's
ability to obtain the required permits for the Marco Shores
community as originally platted. Following the denials, the
Company instituted legal proceedings, implemented various
programs to assist its customers affected by the Corps' action,
and applied for permits from certain administrative agencies for
other areas of the Company's Marco ownership.

On July 20, 1982, the Company entered into an agreement with
the State of Florida and various state and local agencies (the
"Settlement Agreement"), endorsed by various environmental
interest groups, to resolve pending litigation and administrative
proceedings relative to the Marco permitting issues. The
Settlement Agreement became effective when, pursuant thereto,
approximately 12,400 acres of the Company's Marco wetlands were
conveyed to the State in exchange for approximately 50 acres of
State-owned property in Dade County, Florida. In October, 1987,
the Company sold the Dade County property for $9,000,000. The
Settlement Agreement also allowed the Company to develop as many
as 14,500 additional dwelling units in the Marco vicinity. On
October 11, 1991, 1,300 acres of Marco property (7,000 dwelling
units) were conveyed to the Company's lenders pursuant to the
Conveyance Agreement.

The Company placed certain properties in trust to meet its
refund obligation to affected customers. On September 14, 1992,
the Circuit Court of Dade County, Florida approved a settlement
of certain class action litigation instituted by customers
affected by the Marco permit denials, under the terms of which
the Company was required, among other things, to convey more than
120 acres of multi-family and commercial land that had been placed
in trust to the trustee of the 809 member class. As part of the
settlement, the Company guaranteed the amount to be realized from
the sale of the conveyed property. This guaranteed amount shall not
exceed $2,000,000.

56



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES


9. MARCO ISLAND-MARCO SHORES PERMITS - (CONTINUED)

Such settlement enabled the Company to resolve the claims of an
additional 12.7% of its affected customers and re-evaluate the
allowance for Marco permit costs. As a result of such analysis,
the Company was able to reduce such allowance by $12,200,000,
resulting in a $3,983,000 extraordinary gain in 1992 and a
$500,000 credit to accrued expenses to be credited to paid-in
capital following issuance of 250,000 shares of restricted Common
Stock of the Company to the class members. At December 31, 1994,
$2,897,000 remained in the allowance for Marco permit costs,
including $578,000 relating to interest accrued on such
obligations. Based upon the Company's experience with affected
customers, the Company believes that its total obligations to the
three remaining affected customers will not materially exceed the
amount provided for in the accompanying Consolidated Financial
Statements. See "Legal Proceedings".

Information with respect to the allowance for Marco permit
costs follows:




DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------
(IN THOUSANDS)

Refunds requested by affected customers.....$ 319 $ 332
Reserve for settlement guarantee............ 2,000 2,000
Accrued interest on actual and estimated
refund obligation.......................... 578 554
------- -------
Total....................... $ 2,897 $ 2,886
======= =======




10.COMMON STOCK AND EARNINGS PER SHARE INFORMATION

Under the Company's 1987 Stock Incentive Plan (the "Stock
Plan"), an aggregate of 500,000 shares of Common Stock have been
reserved for the granting of non-qualified stock options and the
award of incentive shares to such executive officers and other
key employees of the Company as may be determined by the
Committee administering the Stock Plan. The extent to which
incentive shares are earned and charged to expense will be
determined at the end of the three-year award cycle, based on the
achievement of the Company's net income goal for the award cycle.
Payment of incentive shares earned may be made in shares of the
Company's Common Stock and/or cash. If paid in cash, such payment
will be based on the average daily closing price of the Company's
Common Stock during the last month of the award cycle. The
option features of the Stock Plan are substantially the same as
the Company's incentive stock option plan described above. A
total of 79,940 shares were issued and $233,412 was paid with
respect to awards earned under the Stock Plan as of December 29,
1989 and no additional awards were granted until March 1993 when
Bruce Weiner was granted 20,000 shares of the Company's Common
Stock at a price of $4.00 per share, which was in excess of the
market value of the Company's Common Stock on the grant date.
Such option expired unexercised following Mr. Weiner's removal as
an officer of the Company in 1994.

On June 18, 1992, in conjunction with the Sixth Restatement,
the Company issued warrants to its lenders for the purchase of
277,387 shares of Common Stock at $1.00 per share (the
Warrants"). The Warrants became exercisable on June 18, 1992,
were subject to mandatory repurchase by the Company at the
request of the holder at any time after December 18, 1993 at 75%
of the market price of the Company's Common Stock (unless such
repurchase would cause a default under the Sixth Restatement or
unless the Company elected to effect an underwritten public
offering on a firm commitment basis), and expired on the later
of: (i) 30 days after payment in full of all debt under the Sixth
Restatement; (ii) July 31, 1997, or (iii) such later date as to
which the expiration date had been extended to implement the
provisions applicable to the mandatory repurchase option.

57



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES


10.COMMON STOCK AND EARNINGS PER SHARE INFORMATION - (CONTINUED)

On December 2, 1992, the Company entered into a Warrant
Exercise and Debt Reduction Agreement with Yasawa, providing for
the number of shares issuable upon acquisition of the Warrants by
Yasawa and the exercise of such Warrants by Yasawa to be
increased from 277,387 shares of Common Stock to 289,637 shares
of Common Stock, and adjusting the exercise price to an aggregate
of approximately $314,000. On December 11, 1992, following the
acquisition of the Bank Loan and the Warrants by Mr. Gram and the
immediate transfer of the Bank Loan and the Warrants by Mr. Gram
to Yasawa, Yasawa exercised the Warrants in exchange for debt
reduction credit to the Company of approximately $314,000.

As part of the Selex transaction, Selex was granted an option
which was approved by the holders of a majority of the
outstanding shares of the Company's Common Stock at the Company's
1992 Annual Meeting, to convert the Selex Loan, or any portion
thereof, into a maximum of 850,000 shares of the Company's Common
Stock at a per share conversion price equal to the greater of (i)
$1.25 or (ii) 95% of the market price of the Company's Common
Stock at the time of conversion, but in no event greater than
$4.50 per share (the "Option"). However, on September 14, 1992,
Selex formally waived and relinquished its right to exercise the
Option as to 250,000 shares of the Company's Common Stock to
enable the Company to settle certain litigation involving the
Company through the issuance of approximately 250,000 shares of
the Company's Common Stock to the claimants, without jeopardizing
the utilization of the Company's net operating loss carryforward.
On February 17, 1994, Selex exercised the remaining full 600,000
share Option at a conversion price of $1.90 per share, such that
$1,140,000 in principal was repaid under the First Selex Loan
through such conversion. As a consequence of such conversion,
Selex holds 2,820,066 shares of the Company's Common Stock
(42.06% of the outstanding shares of Common Stock of the Company
based upon the number of shares of the Company's Common Stock
outstanding as of March 24, 1995).

Earnings (loss) per common and common equivalent share were
computed by dividing net income (loss) by the weighted average
number of shares of Common Stock and common stock equivalents
outstanding during each period. The earnings (loss) per share
and the average number of shares of Common Stock and common stock
equivalents used to calculate earnings per share for 1994, 1993
and 1992 were $(3,906,000), $(8,772,000) and $7,336,000 and
6,668,765, 6,065,743 and 5,694,236, respectively.

58




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

THE DELTONA CORPORATION AND SUBSIDIARIES


11. BUSINESS SEGMENTS




YEARS ENDED
______________________________________________________________________________
DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
31, 1994 31, 1993 25, 1992 27, 1991 28, 1990
-------- -------- -------- -------- --------
(IN THOUSANDS)

REVENUES
Real estate:
Net land sales(a)........ $ 2,058 $ 2,432 $ 2,092 $ 1,154 $ 11,612
Housing revenues......... 2,543 344 -0- 120 1,919
Improvement revenues(b).. 1,214 4,725 2,404 -0- 2,152
Interest income(c)....... 1,046 1,197 3,584 5,270 8,236
Other.................... -0- 67 -0- -0- -0-
-------- -------- -------- -------- --------
Total real estate.. 6,861 8,765 8,080 6,544 23,919
Other(d).................. 1,832 3,447 4,372 4,510 5,436
Intersegment sales(e)..... (152) (113) (235) (270) (322)
-------- -------- -------- -------- --------
TOTAL..............$ 8,541 $ 12,099 $ 12,217 $ 10,784 $ 29,033
======== ======== ======== ======== ========
OPERATING PROFITS (LOSSES)
Real estate............... $ 1,055 $ (3,073) $ 1,486 $ (6,750) $ (798)
Other..................... 1,033 279 2,209 1,928 1,789
General corporate expense.. (4,147) (4,721) (7,057) (7,811) (10,602)
Interest expense........... (1,847) (1,257) (3,356) (6,896) (7,397)
-------- -------- -------- -------- --------
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS...$ (3,906) $ (8,722) $ (6,718) $(19,529) $(17,008)
======== ======== ======== ======== ========

REAL
ESTATE OTHER CORPORATE TOTAL
-------- -------- --------- --------

IDENTIFIABLE ASSETS........ 1994 $ 21,515 $ 248 $ 346 $ 22,109
1993 25,997 248 320 26,565
1992 36,450 280 320 37,050

DEPRECIATION EXPENSE....... 1994 49 8 29 86
1993 57 -0- 47 104
1992 109 39 12 160

CAPITAL EXPENDITURES....... 1994 -0- -0- 26 26
1993 22 -0- 72 94
1992 9 -0- 110 119



____________________

(a) Net land sales consist of gross land sales less estimated uncollectible
installment sales and contract valuation discount and, prior to 1991, deferred
revenue (see Notes 1, 2 and 7 to Consolidated Financial Statements).

(b) Improvement revenues consist of revenue recognized due to completion of
improvements on prior period sales and exchanges from undeveloped to developed
lots.

(c) Interest income primarily consists of interest earned on contracts and
mortgages receivable and on temporary cash investments and the amortization of
valuation discounts.

(d) Other consists of revenues from sales other than real estate, the major
portion of which came from the country club operations in prior years. In 1994,
the major portion consists of a gain of $1,051,000 from the termination of its
office lease on its Miami corporate headquarters.

(e) Intersegment sales consist primarily of sales between the Company and
its title insurance subsidiary.





59



SUPPLEMENTAL UNAUDITED QUARTERLY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



EXTRA- EXTRA-
ORDINARY ORDINARY
ITEM: GAIN ON
(LOSS) GAIN SETTLE-
FROM LOSS MENT RE-
OPERATIONS FROM LATING TO
BEFORE (LOSS) DEBT THE MARCO NET
INCOME FROM RESTRU- REFUND OB- INCOME
REVENUES TAXES OPERATIONS CTURING OBLIGATION (LOSS)
-------- --------- -------- -------- -------- ------

1994
First.... $ 1,831 $ (1,802) $ (1,802) $ - $ - $ (1,802)
Second... 1,740 (1,072) (1,072) - - (1,072)
Third.... 2,105 ( 791) ( 791) - - ( 791)
Fourth... 2,865 ( 241) ( 241) - - ( 241)
-------- -------- -------- -------- -------- --------
TOTAL...... $ 8,541 $ (3,906) $ (3,906) $ - $ - $ (3,906)
-------- -------- -------- -------- -------- --------
1993
First.... $ 3,735 $ (997) $ (997) $ - $ - $ (997)
Second... $ 2,084 $ (1,797) $ (1,797) $ - $ - $ (1,797)
Third.... $ 2,523 $ (2,006) $ (2,006) $ - $ - $ (2,006)
Fourth... $ 3,757 $ (3,972) $ (3,972) $ - $ - $ (3,972)
-------- -------- -------- -------- -------- ---------
TOTAL...... $ 12,099 $ (8,772) $ (8,772) $ - $ - $ (8,772)
-------- -------- -------- -------- -------- --------
1992
First.... $ 3,441 $ (1,095) $ (1,095) $ - $ - $ (1,095)
Second... 2,100 (1,390) (1,390) - - (1,390)
Third.... 2,874 (1,742) (1,742) 400 3,983 2,641
Fourth... 3,802 (2,491) (2,581) 9,761 - 7,180
-------- -------- -------- ------- ------- --------
TOTAL...... $ 12,217 $ (6,718) $ (6,808) $ 10,161 $ 3,983 $ 7,336
-------- -------- -------- -------- -------- --------


EARNINGS (LOSS) PER SHARE
- ---------------------------
EXTRAORDINARY NET INCOME
OPERATIONS ITEMS (LOSS)
---------- ------------- ----------

1994
First......... $ (.28) $ - $ (.28)
Second........ (.16) - (.16)
Third......... (.12) - (.12)
Fourth........ (.04) - (.04)
------- ------- -------
TOTAL.................. $ (.59)(a) $ - $ (.59)(a)
======= ======= =======
1993
First........ $ (.16) $ - $ (.16)
Second........ $ (.30) $ - $ (.30)
Third......... $ (.33) $ - $ (.33)
Fourth........ $ (.66)(b) $ - $ (.66)(b)
------- ------- -------
TOTAL................ $ (1.45) $ - $ (1.45)
======= ======= =======
1992
First............ $ (.19) $ - $ (.19)
Second........... (.25) - (.25)
Third............ (.31) .77 .47
Fourth........... (.45) 1.69 1.24
------- ------- -------
TOTAL................. $ (1.19)(a) $ 2.46(a) $ 1.27(a)
======= ======= =======


___________________

(a) Total shown does not agree with earnings per share set forth in the
Company's Statement of Consolidated Operations for the years ended December
31, 1994 and December 25, 1992 due to differences in the calculation of the
weighted average number of shares outstanding at the end of each quarter during
the year.

(b) Certain significant adjustments were recorded in the fourth quarter of 1993
the impact of which on previous quarters in 1993 could not be determined.



60



ITEM 14

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


(A) 1. FINANCIAL STATEMENTS

See Item 8, Index to Consolidated Financial Statements and
Supplemental Data.


(A) 2. FINANCIAL STATEMENT SCHEDULES

PAGE
----


Independent Auditors' Report......................... 62


Schedule VIII - Valuation and qualifying accounts
for the three years ended December 31,
1994................................. 63




All other schedules are omitted because they are not applicable
or not required, or because the required information is included
in the Consolidated Financial Statements or Notes thereto or the
1995 Annual Meeting Proxy Statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A,
incorporated herein by reference.


(A) 3. EXHIBITS

See the Exhibit Index included herewith.


(B) REPORTS ON FORM 8-K

As stated in the Company's Annual Report on Form 10-K for
1993, a Report on Form 8-K dated February 17, 1994 responding to
Item 5 "Other Events" was filed on March 14, 1994.


61



INDEPENDENT AUDITORS' REPORT





TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF THE DELTONA
CORPORATION:


We have audited the consolidated financial statements of The
Deltona Corporation and subsidiaries (the "Company") as of
December 31, 1994 and 1993, and for each of the three years in
the period ended December 31, 1994, and have issued our report
thereon dated March 24, 1995 (which expresses an unqualified
opinion and includes explanatory paragraphs relating to the
Company's ability to continue as a going concern and uncertainty
as to the Company's ability to estimate future cancellations of
certain contracts and mortgages receivable sold with recourse),
included elsewhere in this Annual Report on Form 10-K. Our
audits also included the financial statement schedules listed in
Item 14(a)2 of this Annual
Report on Form 10-K. These financial statement schedules are the
responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits. In our opinion,
such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth
therein.




DELOITTE & TOUCHE LLP
Certified Public Accountants
Miami, Florida
March 24, 1995




62





SCHEDULE VIII

THE DELTONA CORPORATION AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)





ADDITIONS

THOSE VALUATION ADDITIONS
AND QUALIFYING CHARGED DEDUCTIONS
ACCOUNTS TO REVENUES FROM
WHICH ARE BALANCE COSTS, REVENUES BALANCE
DEDUCTED IN AT AND AT
THE BALANCE SHEET BEGINNING EXPENSES END
FROM THE ASSETS OF OF
TO WHICH THEY APPLY PERIOD PERIOD
- ------------------- ---------- ---------- ---------- --------


Year ended
December 31, 1994

Allowance for
uncollectible
contracts(a).... $ 1,456 $ 712 $ 795 $ 1,373
========= ========= ======== ========
Unamortized
contract
valuation
discount(b)..... $ 895 $ 223 $ 205 $ 913
========= ========= ======== ========
Allowance for
doubtful
accounts(c)..... $ -0- $ -0- $ -0- $ -0-
========= ========= ======== ========
Unamortized
mortgage
valuation
discount(d)..... $ 100 $ -0- $ 100 $ -0-
========= ========= ======== ========

Year ended
December 31, 1993

Allowance for
uncollectible
contracts(a)... $ 1,646 $ 1,670 $ 1,860 $ 1,456
========= ========= ======== ========
Unamortized
contract
valuation
discount(b).... $ 1,269 $ 252 $ 626 $ 895
========= ========= ======== ========
Allowance for
doubtful
accounts(c).... $ 58 $ 58 $ -0-
========= ======== ========
Unamortized
mortgage
valuation
discount(d).... $ -0- $ 100 $ 100
========= ========= ========


Year ended
December 25, 1992

Allowance for
uncollectible
contracts(a).... $ 6,606 $ 248 $ 5,208 $ 1,646
========= ========= ======== ========
Unamortized
contract
valuation
discount(b)..... $ 5,462 $ 175 $ 4,368 $ 1,269
========= ========= ======== ========
Allowance for
doubtful
accounts(c)..... $ 174 $ 116 $ 58
========= ======== ========


- ----------------
(a) Represents estimated uncollectible contracts receivable (see Notes 1 and 2
to Consolidated Financial Statements).

(b) Represents the unamortized discount generated from initial valuations of
contracts receivable (see Notes 1 and 2 to Consolidated Financial Statements).

(c) Represents allowance for estimated uncollectible mortgages and other
receivables.

(d) Represents the unamortized discount generated from initial valuations of
mortgages receivable (see Notes 1 and 2 to Consolidated Financial Statements).




63




SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Act of 1934, the Company has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.

THE DELTONA CORPORATION
(Company)


By /s/ EARLE D. CORTRIGHT, JR. DATE: March 31,1995
------------------------------------
Earle D. Cortright, Jr., PRESIDENT &
CHIEF OPERATING OFFICER

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



/s/ ANTONY GRAM /s/ CORNELIS VAN DE PEPPEL
- -------------------------------- ----------------------------
Antony Gram, CHAIRMAN OF THE Cornelis van de Peppel,
BOARD OF DIRECTORS & CHIEF DIRECTOR
EXECUTIVE OFFICER

/s/ EARLE D. CORTRIGHT, JR. /s/ CORNELIS L.J.J. ZWAANS
- -------------------------------- ------------------------------
Earle D. Cortright, Jr., Cornelis L.J.J. Zwaans,
PRESIDENT & CHIEF OPERATING DIRECTOR
OFFICER
(PRINCIPAL FINANCIAL
AND ACCOUNTING OFFICER)


/s/ NEIL E. BAHR
- -------------------------------
Neil E. Bahr, DIRECTOR

/s/ GEORGE W. FISCHER
- -------------------------------
George W. Fischer, DIRECTOR


/s/ THOMAS B. MCNEILL
- -------------------------------
Thomas B. McNeill, DIRECTOR


/s/ MARCELLUS H.B. MUYRES
- -------------------------------
Marcellus H.B. Muyres, DIRECTOR


/s/ LEONARDUS G.M. NIPSHAGEN
- -------------------------------
Leonardus G.M. Nipshagen, DIRECTOR DATE: March 31, 1995



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