CALTON INC, POS AM, 1996-03-25

CALTON INC
POS AM, 1996-03-25
OPERATIVE BUILDERS

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As filed with the Securities and Exchange Commission on March 25, 1996

Registration No. 33-60022

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________________

POST-EFFECTIVE AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

________________________

Calton, Inc.
(Exact name of registrant as specified in its charter)

New Jersey 1531 22-2433361
(State or other juris- (Primary Standard (I.R.S. Employer
diction of incorporation Industrial Classifi- Identification No.)
or organization) cation Code Number)

500 Craig Road
Manalapan, New Jersey 07726-8790
(908) 780-1800

(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

_________________________

Anthony J. Caldarone
President and Chief Executive Officer
Calton, Inc.
500 Craig Road
Manalapan, New Jersey 07726-8790
(908) 780-1800
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copy to:

John A. Aiello, Esq.
Giordano, Halleran & Ciesla
A Professional Corporation
125 Half Mile Road
Middletown, New Jersey 07748

_________________________

Approximate date of commencement of proposed sale to the public: From
time to time after the Post-Effective Amendment to the Registration Statement
becomes effective.

If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, please check the following box. | X |

CALTON, INC.

CROSS-REFERENCE SHEET

Pursuant to Item 501(b) of Regulation S-K

Item Number and Caption in Form S-1 Caption of Heading in
Prospectus

1. Forepart of the Registration State-
ment and Outside Front Cover Page
of Prospectus ...................... Cover Page of
Registration Statement;
and Outside Front Cover
Page of Prospectus

2. Inside Front and Outside Back Cover
Pages of Prospectus ................ Inside Front and
Outside Back Cover
Pages of Prospectus;
Table of Contents; and
Available Information

3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges ............................ Prospectus Summary;
Risk Factors; and Not
Applicable

4. Use of Proceeds ..................... Not Applicable

5. Determination of Offering Price ..... Not Applicable

6. Dilution ............................ Not Applicable

7. Selling Securityholders ............. Principal and Selling
Securityholders

8. Plan of Distribution ................ Outside Front Cover
Page of Prospectus; and
Plan of Distribution

9. Description of Securities to be
Registered ......................... Description of Capital
Stock

<PAGE>
10. Interests of Named Experts and
Counsel ............................ Legal Matters; Experts

11. Information with Respect to the
Registrant ......................... Cover Page; Available
Information; Prospectus
Summary; Risk Factors;
The Company; Price
Range of Common Stock
and Dividend Policy;
Capitalization;
Selected Historical
Consolidated Financial
Information;
Management's Discussion
and Analysis of
Financial Condition and
Results of Operations;
Business; Management;
Principal and Selling
Securityholders; and
Consolidated Financial
Statements

12. Disclosure of Commission's Position
on Indemnification for Securities
Act Liabilities .................... Not Applicable

SUBJECT TO COMPLETION, DATED MARCH 25, 1996

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor any offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be
any sale of these securities in any State in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under
the securities laws of any State.

PROSPECTUS

CALTON, INC.

5,240,226 Shares of Common Stock,

Of the securities being offered hereby, all of the shares of
Common Stock, .01 par value per share ("Common Stock"), are being
sold by certain securityholders (the "Selling Securityholders") of
Calton, Inc. ("Calton" or the "Company"). Certain of the shares of
Common Stock offered hereby were acquired by the Selling
Securityholders in connection with the joint plan of reorganization
(the "Plan of Reorganization") of Calton and certain of its
subsidiaries (the "Reorganizing Subsidiaries") which was confirmed
by the United States Bankruptcy Court in May 1993. See "The
Company-Plan of Reorganization."

The shares of Common Stock offered hereby by the Selling
Securityholders may be offered in transactions on the American Stock
Exchange ("AMEX"), in negotiated transactions, or in a combination
of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. The Selling
Securityholders may effect such transactions to or through
broker-dealers and such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the Selling
Securityholders and/or the purchasers of such securities for whom
such broker-dealers may act as agent or to whom they may sell as
principals, or both. In addition, the Selling Securityholders may
pledge the shares of Common Stock to broker-dealers and such
broker-dealers may resell the shares of Common Stock in privately
negotiated transactions, transactions on AMEX or otherwise. See
"Plan of Distribution" and "Principal and Selling Securityholders."

The Company will not receive any proceeds from the sale of
Common Stock by the Selling Securityholders.

The Company has agreed to bear certain expenses in connection
with the registration and sale of the Common Stock registered
hereunder and has agreed to indemnify the Selling Securityholders
against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Plan of Distribution" and
"Principal and Selling Securityholders."

The Common Stock of the Company is currently traded on AMEX
under the symbol CN. On March 22, 1996, the last reported sales
price of the Company's Common Stock, as reported on AMEX, was $.6875
per share.

SEE "RISK FACTORS" FOR CERTAIN INFORMATION THAT SHOULD BE CONSIDERED
BY PROSPECTIVE INVESTORS.
___________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is March 25, 1996.

TABLE OF CONTENTS

Page

Available Information. . . . . . . . . . . . . . . . 2
Prospectus Summary . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . 8
The Company. . . . . . . . . . . . . . . . . . . . . 12
Price Range of Common Stock and Dividend Policy. . . 15
Capitalization . . . . . . . . . . . . . . . . . . . 16
Selected Historical Consolidated
Financial Information . . . . . . . . . . . . . . . 17
Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . 19
Business . . . . . . . . . . . . . . . . . . . . . . 31
Management . . . . . . . . . . . . . . . . . . . . . 47
Principal and Selling Securityholders. . . . . . . . 57
Description of Capital Stock . . . . . . . . . . . . 60
Shares Eligible for Future Sale. . . . . . . . . . . 61
Plan of Distribution . . . . . . . . . . . . . . . . 61
Legal Matters. . . . . . . . . . . . . . . . . . . . 62
Experts. . . . . . . . . . . . . . . . . . . . . . . 62
Index to Financial Statements. . . . . . . . . . . . F-1

AVAILABLE INFORMATION

Calton has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement on Form S-1 under the
Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities offered hereby. As permitted by the rules
and regulations of the Commission, this Prospectus omits certain
information, exhibits and undertakings contained in the Registration
Statement. Such additional information, exhibits and undertakings
can be inspected at the Commission's public reference room, Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the
Commission's regional offices located at Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511
and at Seven World Trade Center, New York, New York 10048. Copies
of such material can also be obtained from the Public Reference
Section of the Commission, Washington, D.C., at prescribed rates.
Statements made in the Prospectus as to the contents of any
contract, agreement or other document referred to are not
necessarily complete; with respect to each such contract, agreement
or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.

Calton is subject to the informational reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). In accordance therewith, Calton files annual and quarterly
reports, proxy statements and other information with the Commission.
Such reports, proxy statements and other information may be
inspected and copied at prescribed rates, at the public reference
facilities maintained by the Commission at the addresses set forth
above and at the offices of the American Stock Exchange, 86 Trinity
Place, New York, New York 10006-1881.

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more
detailed information, financial statements (including the notes
thereto) and pro forma information appearing elsewhere in this
Prospectus. Unless the context requires otherwise, references to
the "Company" include Calton and its consolidated subsidiaries.

The Company

The Company designs, constructs and sells single family
attached and detached homes primarily in central New Jersey, central
Florida and eastern Pennsylvania. The Company has an established
reputation in its markets, having constructed and sold over 16,650
homes in 138 residential communities during the last 26 years. The
Company markets primarily to first time buyers and first and second
time move-up buyers and delivered 749 homes in fiscal 1995 having an
average sales price of approximately $229,000.

The Company was offering homes for sale in 20 residential
communities at November 30, 1995, with prices ranging from $97,000
to $473,000. At November 30, 1995, the backlog of homes under
contract was $36 million, compared to $98.5 million at November 30,
1994, and consisted of 166 homes having an average sales price of
$217,000. The 1994 backlog levels benefitted from a greater number
of communities open for sale in the Florida division, operating two
divisions in the Northeast and an increasing interest rate
environment which may have accelerated home purchase decisions in
the first nine months of the year compared to the comparable period
in fiscal 1995. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

At November 30, 1995, the Company owned or controlled
approximately 2,835 lots, consisting of 919 lots in its 20
residential communities and 1,916 lots located on 15 parcels of land
which primarily are controlled through option agreements and which,
in a number of cases, are subject to the satisfactory completion of
feasibility studies and the receipt of all required approvals.

The Company's operating strategy consists of: (i) targeting the
first time homebuyer and the first and second time move-up buyer;
(ii) conducting homebuilding activities in markets that, based on
economic and demographic trends, demonstrate strong growth
potential; (iii) designing each residential community to meet the
needs of the particular market based on local conditions and
demographic factors; (iv) minimizing land risks by purchasing
entitled tracts of well-located property through options or
contingent purchase contracts and limiting land holdings to those
which can be developed within two years from the date of purchase;
(v) developing residential projects in phases which enables the
Company to reduce financial exposure, control construction and
operating expenses and adapt quickly to changes in customer demands
and other market conditions; (vi) utilizing subcontractors to
perform land development and home construction on a fixed price
basis; and (vii) emphasizing the quality and value of its homes.

In March 1993, Calton and certain of its subsidiaries filed
petitions under Chapter 11 of the United States Bankruptcy Code.
The United States Bankruptcy Court confirmed the Company's Plan of
Reorganization on May 6, 1993 and the Company's financial
reorganization (the "Reorganization") was consummated on May 28,
1993. The Reorganization resulted in the elimination of
approximately $84.4 million in indebtedness and accrued interest
owed to certain creditors. See "The Company--Plan of
Reorganization.

The Offering

Common Stock offered by the Selling
Securityholders............................. 5,240,226

Summary Consolidated
Financial Information of the Company
(Dollars in thousands,
except unit data)

The summary information below presents summary consolidated
financial information of the Company. This summary information
should be read in conjunction with the Consolidated Financial
Statements and related notes thereto appearing elsewhere in this
Prospectus and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." As a result of the
consummation of the Company's Plan of Reorganization, effective May
28, 1993, and the application of fresh-start accounting in
accordance with Statement of Position 90-7 of the American Institute
of Certified Public Accountants ("SOP 90-7"), the Company's
financial results for periods ending on or prior to May 31, 1993 are
not comparable with results experienced by the Company in subsequent
periods. Financial results for the six months ended May 31, 1993
are separated from subsequent periods by a black line.

At
November 30, 1995

Balance Sheet Data:
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . $ 64,246
Commercial land and buildings. . . . . . . . . . . . . . . . 9,439
Total assets . . . . . . . . . . . . . . . . . . . . . . . . 91,416
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . 45,000
Mortgages payable. . . . . . . . . . . . . . . . . . . . . . 1,227
Shareholders' equity . . . . . . . . . . . . . . . . . . . . 27,013

(1)Reflects units for which the closing of sale has occurred and the risk of
ownership has been transferred to the buyer. Revenues from units delivered
are recognized at closing.

(1)Units sold, net, reflects new sales orders, net of cancellations, received
during the applicable period for units for which a contract has been signed
by a customer and a full deposit has been received. Backlog represents units
which have been sold but not delivered at the end of a period.

RISK FACTORS

The Homebuilding Industry

Homebuilders, including the Company, are subject to various
risks, such as economic recession, competitive overbuilding,
government regulation, increases in real estate taxes or costs of
materials and labor, the availability of suitable land on
reasonable terms (including price), weather conditions,
unanticipated changes in customer preference and the availability
of construction funds or mortgage loans at rates acceptable to
builders and home buyers. Such factors (and thus the
homebuilding business) have tended to be cyclical in nature. As
a result, the Company's operating results can vary significantly
from quarter to quarter and from year to year.

The Company's business and earnings are substantially
dependent on its ability to obtain financing on acceptable terms
for its construction and development activities. Over the last
few years, financing has become less available to the real estate
industry in general. Moreover, increases in interest rates could
reduce the funds available to the Company for its future
operations and would increase the Company's expenses. The
Company's revolving credit agreement with a consortium of lenders
(the "Amended Credit Agreement") will expire in February 1997.
It will be necessary for the Company to extend or replace the
Amended Credit Agreement prior to its expiration in February
1997. No assurance can be given that the Company will be able to
arrange for an extension or replacement of the Amended Credit
Agreement. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and
Capital Resources."

The homebuilding industry is subject to extensive
environmental, building, zoning and sales regulation by various
federal, state and local authorities, which affects construction
activities as well as sales activities and other dealings with
consumers. The Company must obtain for its development
activities the approval of numerous governmental authorities, and
changes in local circumstances or applicable law may necessitate
the application for additional approvals or the modification of
existing approvals. As a result of these regulations, the time
required to market the Company's products is increased by
prolonging the time between the execution of a contract to
acquire a parcel of land and the commencement of marketing and
completion of construction. See "Business--Regulation and
Environmental Matters."

The homebuilding housing industry is highly competitive, and
the Company competes in each of its markets with a large number
of homebuilding companies. Some of these companies are larger
than the Company and have greater financial resources. See
"Business--Competition."

Any one of the factors referred to above could materially
adversely affect the Company's results of operation and the
levels of cash flow necessary or available to meet its fixed
obligations.

Geographic Concentration

During the five year period ended November 30, 1995,
approximately 71% of the Company's revenues were generated by its
homebuilding and land development activities in New Jersey and
eastern Pennsylvania. The determination made in 1993 to wind
down the Company's California operations and the Company's recent
determination to wind down its Chicago operations may increase in
the short term the percentage of revenues derived from the
Company's homebuilding activities in New Jersey. The depressed
economic and real estate conditions in New Jersey and the
contraction of financing available to the homebuilding industry
over the last few years adversely affected the Company's results
of operations. Any prolonged or further downturn in the national
or New Jersey economy may have a material adverse effect on the
Company's sales and profitability and consequently its ability to
service its debt obligations, including its obligations under the
Amended Credit Agreement.

Leverage

The Company is and expects to remain highly leveraged. As
of November 30, 1995, $45 million was outstanding under the
Amended Credit Agreement and the Company's total indebtedness was
approximately $49.5 million. Amounts outstanding under the
Amended Credit Agreement are and will be collateralized by security
interests and liens on substantially all of the assets of the
Company.

There can be no assurance that the Company will be able to
satisfy the financial covenants included in the Amended Credit
Agreement. A failure to satisfy such covenants could result in
an inability to borrow funds under the Amended Credit Agreement.
The Company expects to generate sufficient cash flow from
operations to meet its debt service obligations. However, the
ability of the Company to meet its obligations will be dependent
upon the future performance of the Company and will be subject to
financial, business and other factors affecting the business and
operations of the Company, including factors beyond its control,
as well as prevailing economic conditions. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

Operating Losses in Recent Fiscal Years

The Company has incurred operating losses in certain recent
fiscal periods. During fiscal 1995, the Company incurred an
operating loss of $1,225,000. Prior to the consummation of the
Reorganization (as defined herein), the Company incurred an
operating loss of $15.6 million for the six month period ended
May 31, 1993, compared to an operating loss of $5.8 million for
the corresponding period of the prior year, and operating losses
of $25.6 million and $43.2 million, respectively, for the fiscal
years ended November 30, 1992 and November 30, 1991. The
Company's ability to achieve financial stability will depend on a
number of factors, including conditions in the housing industry.
See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

Shares Eligible for Future Sale

Future sales of substantial amounts of Calton's Common Stock
in the public market could adversely affect prevailing market
prices. As of March 1, 1996, there were approximately 26,445,000
shares of Common Stock outstanding, all of which have been
registered under the Act and are tradeable without restriction
(except as to affiliates of Calton) or further registration under
the Securities Act. The Company has registered 5,240,226 shares
held by the Selling Securityholders for public sale by means of a
shelf registration statement (of which this Prospectus forms a
part) (the "Shelf Registration Statement") filed under the
Securities Act which the Company, under the terms of a
registration rights agreement (the "Registration Rights
Agreement") executed pursuant to the Plan of Reorganization, is
obliged to keep effective until August 1996. See "The Company --
Plan of Reorganization" and "Principal and Selling
Securityholders -- Registration Rights Agreement."

Calton has reserved 1,492,605 shares of Common Stock for
issuance upon the exercise of options granted pursuant to the
Calton, Inc. Amended and Restated 1993 Non-Qualified Stock Option
Plan (the "1993 Stock Option Plan"). All of these shares, and
800,000 shares reserved for issuance in connection with the
Company's 401(k) Plan, have been registered pursuant to the
Securities Act. In addition, the Company expects to submit a
proposal to its shareholders in April 1996 to adopt the Calton,
Inc. 1996 Equity Incentive Plan (the "Equity Incentive Plan").
It is anticipated that 2,000,000 shares will be reserved for
issuance under the Equity Incentive Plan and that such shares
will be registered under the Securities Act. See "Shares
Eligible for Future Sale."

Certain Anti-takeover Provisions

The New Jersey Business Corporation Act contains certain
provisions that could have the effect of making it more difficult
for a third party to acquire, or discouraging a third party from
attempting to acquire, control of Calton. In addition, Calton's
Amended and Restated Certificate of Incorporation authorizes
10,000,000 shares of Class A Preferred Stock, and provides that
the Calton Board of Directors (the "Board") may issue such stock
with such dividend, liquidation, conversion, voting, redemption
and other rights as the Board establishes at that time. As a
result, the Board may issue such stock with such rights as would
discourage possible acquirors of Calton from making a tender
offer or other attempt to gain control of Calton. These
provisions of the New Jersey Business Corporation Act and
Calton's Amended and Restated Certificate of Incorporation could
limit the price that certain investors might be willing to pay in
the future for shares of Calton's Common Stock and could make it
more difficult for shareholders to effect certain corporate
actions.

THE COMPANY

General

The Company designs, constructs and sells single family
attached and detached homes primarily in central New Jersey,
central Florida and eastern Pennsylvania. The Company has an
established reputation in its markets, having constructed and
sold over 16,650 homes in 138 residential communities during the
last 26 years. The Company markets primarily to first time
buyers and first and second time move-up buyers and delivered 749
homes in fiscal 1995 having an average sales price of
approximately $229,000.

The Company was offering homes for sale in 20 residential
communities at November 30, 1995, with prices ranging from
$97,000 to $473,000. At November 30, 1995, the backlog of homes
under contract was $36 million, compared to $98.5 million at
November 30, 1994, and consisted of 166 homes having an average
sales price of $217,000. The 1994 backlog levels benefitted from
a greater number of communities open for sale in the Florida
division, operating two divisions in the Northeast and an
increasing interest rate environment which may have accelerated
home purchase decisions in the first nine months of the year
compared to the comparable period in fiscal 1995. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations."

At November 30, 1995, the Company owned or controlled
approximately 2,835 lots, consisting of 919 lots in its 20
residential communities and 1,916 lots located on 15 parcels of
land which primarily are controlled through option agreements and
which, in a number of cases, are subject to the satisfactory
completion of feasibility studies and the receipt of all required
approvals.

The Company's operating strategy consists of: (i) targeting
the first time homebuyer and the first and second time move-up
buyer; (ii) conducting homebuilding activities in markets that,
based on economic and demographic trends, demonstrate strong
growth potential; (iii) designing each residential community to
meet the needs of the particular market based on local conditions
and demographic factors; (iv) minimizing land risks by purchasing
entitled tracts of well-located property through options or
contingent purchase contracts and limiting land holdings to those
which can be developed within two years from the date of
purchase; (v) developing residential projects in phases which
enables the Company to reduce financial exposure, control
construction and operating expenses and adapt quickly to changes
in customer demands and other market conditions; (vi) utilizing
subcontractors to perform land development and home construction
on a fixed price basis; and (vii) emphasizing the quality and
value of its homes.

Calton was incorporated in 1981 for the purpose of acquiring
all of the issued and outstanding capital stock of Kaufman and
Broad of New Jersey, Inc., a New Jersey corporation, from Kaufman
and Broad, Inc., a Maryland corporation. After the acquisition,
the name of Kaufman and Broad of New Jersey, Inc. was changed to
Calton Homes, Inc. ("Calton Homes"), which continues as a wholly
owned subsidiary of Calton. Calton maintains its executive
offices at 500 Craig Road, Manalapan, New Jersey 07726 and its
telephone number is (908) 780-1800.

Plan of Reorganization

On March 9, 1993, Calton and certain of its subsidiaries
filed petitions under Chapter 11 of the United States Bankruptcy
Code. The United States Bankruptcy Court for the District of New
Jersey confirmed the Plan of Reorganization of Calton and these
subsidiaries on May 6, 1993, and the Plan of Reorganization was
consummated on May 28, 1993 (the "Effective Date"). A
description of the events leading to the filing of the petitions
and the transactions effected pursuant to the Plan of
Reorganization is provided below.

During the years preceding the bankruptcy filing, the
homebuilding industry was adversely affected by a variety of
factors which resulted in a decline in the demand for new homes
and made it difficult for homebuilders, such as the Company, to
complete the development of existing projects and pursue new
development opportunities. In 1989, these factors contributed to
Calton's inability to comply with certain covenants and payment
provisions contained in its $100.0 million credit agreement with
a group of bank lenders (the "Credit Agreement") and the
indentures which governed Calton's 16-5/8% Senior Subordinated
Notes due 1992 (the "Senior Subordinated Notes") and 12-5/8%
Subordinated Notes due 1996 (the "Subordinated Notes" and,
together with the Senior Subordinated Notes, the "Old Notes").
As a result of these defaults, Calton engaged in extensive
negotiations with certain of its creditors which resulted in the
formulation of the Plan of Reorganization. The Plan of
Reorganization resulted in, among others, the following
transactions:

- the holders of the Old Notes received a combination of
cash, equity securities and short-term notes in
exchange for the Old Notes which resulted in the
discharge of $61.5 million aggregate principal amount
of indebtedness and $22.9 million of accrued interest
thereon. The equity securities issued to the holders
of the Old Notes represented approximately 93.5% of the
voting power represented by the Company's Common Stock
and Redeemable Convertible Preferred Stock on the
Effective Date.

- the Credit Agreement was amended, resulting in the
Amended Credit Agreement, which, among other things,
extended the maturity date of the indebtedness
thereunder to June 1, 1995 and increased borrowing
availability thereunder from approximately $61.0
million to $73.5 million (subject to "borrowing base"
limitations and periodic and other reductions of
borrowing availability during the term of the
agreement). See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -
Liquidity and Capital Resources";

- a new Board of Directors was appointed and a new senior
management team was put in place. See "Management."

See Note 11 to the Company's Consolidated Financial
Statements for additional information with respect to
transactions effected pursuant to the Plan of Reorganization.

Pursuant to the Plan of Reorganization, the Company entered
into the Registration Rights Agreement with each Selling
Securityholder. Pursuant to the Registration Rights Agreement,
the Company is required to effect the registration of the Common
Stock issued to the Selling Securityholders pursuant to the Plan
of Reorganization. The Registration Rights Agreement also
provides the Selling Securityholders certain "piggyback"
registration rights. Upon the request of the Selling
Securityholders who own not less than 5% of the shares subject to
the Registration Rights Agreement, Calton is required to amend
the registration statement, of which this Prospectus forms a
part, to provide for underwritten offerings of the Common Stock.
See "Principal and Selling Securityholders--Registration Rights
Agreement" and "Plan of Distribution."

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

Calton's Common Stock is currently traded on the American
Stock Exchange ("AMEX") under the symbol CN. Set forth below are
the high and low sales prices of the Common Stock for the periods
indicated.

Fiscal 1994

First Quarter.................. $2-5/16 $1-1/2
Second Quarter................. 2-11/16 1-1/2
Third Quarter.................. 1-11/16 1-3/8
Fourth Quarter................. 1-13/16 7/8

Fiscal 1995

First Quarter.................. $1-1/8 $ 5/8
Second Quarter................. 11/16 3/8
Third Quarter.................. 1/2 3/8
Fourth Quarter................. 9/16 5/16

On March 22, 1996, the last reported sale price for the
Common Stock on AMEX was $11/16 per share, and there were
approximately 663 record holders of Common Stock.

Calton has not paid any cash dividends on its Common Stock
to date, and the payment of dividends is prohibited by the
Amended Credit Agreement.

CAPITALIZATION

The following table presents the capitalization of the
Company as of November 30, 1995.

November 30, 1995
Notes and Mortgages Payable: (Dollars in thousands)

Mortgages payable(1). . . . . . . . . . $ 1,227

Amended Credit Agreement. . . . . . . . 45,000

Total debt. . . . . . . . . . . . . . 46,227

Shareholders' Equity

Common stock, par value $.01 per share;
53,700,000 shares authorized;
26,371,000 shares issued and
outstanding(2) . . . . . . . . . . . . 264
Preferred Stock, par value $.10 per
share; 2,600,000 shares authorized;
none outstanding . . . . . . . . . . . --
Class A Preferred Stock, par value $.10
per share; 10,000,000 shares authorized;
none outstanding . . . . . . . . . . . --
Paid in capital . . . . . . . . . . 22,822
Retained earnings . . . . . . . . . 3,927

Total shareholders' equity. . . . . . 27,013

Total capitalization. . . . . . . . . $91,416

(1) Mortgages payable are non-recourse to Calton.

(2) Does not include approximately 1,270,000 shares of Common Stock
issuable upon exercise of options granted under the Company's stock
option plans.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(Dollars in thousands, except per share data)

The following tables set forth selected historical
consolidated financial information of the Company. The selected
statement of operations data and balance sheet data have been
derived from the Company's Consolidated Financial Statements for
each of the years in the two year period ended November 30, 1992,
the six month periods ended May 31 and November 30, 1993 and each
of the years in the two year period ended November 30, 1995 and
the notes thereto which have been audited by Coopers & Lybrand
L.L.P., independent auditors. The selected historical
consolidated financial data should be read in conjunction with,
and is qualified in its entirety by, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements and related notes included
elsewhere in this Prospectus. Certain amounts for the prior
years have been reclassified to conform with the current period
presentation. In light of the effects of fresh-start accounting
under SOP 90-7 and the Reorganization, the Company's results for
periods ending on or prior to May 31, 1993 are not comparable
with results experienced by the Company in subsequent periods and
are separated by a black line. In addition, the consolidated
balance sheet data as of and subsequent to November 30, 1993 are
separated from all prior consolidated balance sheet data by a
black line since due to the adoption of fresh-start accounting,
such data are not comparable.
Six Six Fiscal Fiscal
Months Months Year Year
Fiscal Years Ended Ended Ended Ended Ended
November 30, May 31, November November November
1991 1992 30, 1993 30, 1993 30, 1994 30, 1995

Statement of
Operations Data
Revenues $117,980 $135,421 $ 76,555 $ 83,351 $168,723 $180,843
Equity in operations
of Talcon, L.P. and
joint ventures (14,211) (6,300) (9,422) -- -- --
103,769 129,121 67,133 83,351 168,723 180,843
Costs and expenses
Cost of revenues 105,471 116,296 68,304 67,473 139,339 159,690
Selling, general and
administrative 23,660 24,285 10,785 10,100 20,183 18,845
Provision for
estimated net
realizable value 17,319 13,665 3,384 -- 440 1,593
Restructuring charges -- -- -- -- -- 1,940
Amortization of values
in excess of amounts
allocable as
identifiable net assets 505 505 253 218 206 --
146,955 154,751 82,726 77,791 160,128 182,068
Income (loss)
from operations (43,186) (25,630) (15,593) 5,560 8,595 (1,225)

Other charges (credits)
Interest expense, net 10,113 10,094 3,338 879 1,235 1,847
Other (income) expense 817 2,669 37,445 (75) -- (765)
Reorganization charges -- -- 37,493 -- -- --
Amortization of
deferred charges 1,604 218 108 -- -- --
Write-off of
financing costs -- -- -- -- 800 --

Income (loss) before
income taxes and
extraordinary gain (55,720) (38,611) (56,494) 4,756 6,560 (2,307)
Provision in lieu
of income taxes/
(benefit) (12,182) -- -- 1,884 2,367 831
Income (loss) before
extraordinary gain (43,538) (38,611) (56,494) 2,872 4,193 (3,138)
Extraordinary gain -- -- 58,311 -- -- --
Net income (loss) $(43,538)$(38,611)$ 1,817 $ 2,872 $ 4,193 $ (3,138)
Income (loss) per
share before
extraordinary gain $ (1.28)$ (1.14)$ (1.67)$ .11 $ .16 $ .12
$ (1.28)$ (1.14)$ .05 $ .11 $ .16 $ .12
At November 30,
1991 1992 1993 1994 1995
Balance Sheet Data:
Inventories $126,194 $110,329 $ 78,187 $ 88,802 $ 64,246
Commercial land
and buildings 18,814 17,230 14,443 16,597 9,439
Total assets 230,978 187,909 110,930 122,144 91,416
Long-term debt 130,994 130,994 55,000 60,000 45,000
Mortgages payable 16,620 10,834 7,792 9,398 1,227
Shareholders'
equity (deficit) 38,082 (452) 23,893 29,045 27,013

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

Results of Operations

Results of Operations for the Years Ended November 30, 1995
and 1994.

Revenues for the year ended November 30, 1995 were $180.8
million compared to revenues of $168.7 million for the year ended
November 30, 1994. Deliveries of 749 homes resulted in housing
revenues of $171.3 million for the year ended November 30, 1995.
For the year ended November 30, 1994, the Company delivered 899
homes which generated $165.5 million of housing revenues.
Housing revenues in 1995 increased four percent (4%) reflecting
an increase in average selling prices to $229,000 for the homes
delivered during the year compared to $184,000 for the homes
delivered in 1994. This increase in average revenue per home is
consistent with the Company's plan to position itself in middle
and upscale market segments in the Northeast and Orlando, Florida
markets with enhanced margin potential and reduce its former
concentration in entry level, multi-family products because of
unfavorable demographic trends and increasing regulatory costs.
Deliveries in the Northeast division comprised seventy percent
(70%) of the Company's total deliveries in fiscal 1995 where
average selling prices increased to $265,000 from $226,000 in
1994. Deliveries in the Orlando division comprised twenty-four
percent (24%) of total deliveries in fiscal 1995, where average
selling prices increased to $125,000 in 1995 from $109,000 in
1994. The seventeen percent (17%) decrease in home deliveries in
fiscal 1995 is primarily attributable to a thirty-nine percent
(39%) decrease of home deliveries in the Orlando, Florida
division primarily due to the timing of new project openings.

The Company's gross profit margin on homes delivered was
approximately twelve percent (12%) during the year ended November
30, 1995, compared to seventeen percent (17%) in the year ended
November 30, 1994. The gross profit margin on homes delivered in
1995 was impacted by increased competition in a difficult market
while the homes delivered in 1994 reflected the revaluation of
the Company's inventory as a result of the application of
fresh-start accounting and reporting in connection with the
Company's 1993 Plan of Reorganization. In addition, gross profit
margins have been, and will continue to be, unfavorably impacted
by increased carrying costs resulting from lower absorption
rates. Gross profit margins have also been impacted by the fact
that the Company's land pipeline, which was severely depleted
when it completed its Reorganization in May 1993, has been
refilled in a transitional market environment that reflected
upward price pressures on land that could not be entirely passed
along to buyers. As a result of the factors discussed above and
other variables, the number and average selling prices of homes
sold and delivered and gross profit realized in 1995 may not be
indicative of future deliveries.

During the second quarter of fiscal 1995, as a result of the
consolidation of the New Jersey-North and New Jersey-South
divisions and economic and market conditions, the Company decided
not to incur further preacquisition costs on nine properties
controlled under option. These actions resulted in a pre-tax
charge of approximately $1.1 million that is reflected in Cost of
revenues. The Company finalized the accounting for a community
during the second quarter of fiscal 1995 that delivered its last
home earlier in 1995. A reserve previously provided during the
delivery period of the community was no longer required and the
likelihood of payment of the amount reserved was remote. As a
result a pre-tax credit of $1.1 million is reflected in Cost of
revenues.

In the year ended November 30, 1995, the Company recorded
non-cash charges to the provision for estimated net realizable
value of $1.6 million to reflect certain inventory, primarily two
properties, at their estimated net realizable value. For the
year ended November 30, 1994, $400,000 was recorded as a
provision for estimated net realizable value. Estimated net
realizable value has been determined based upon the amount the
Company expects to realize through sale or development based on
management's plans for each property. The estimation process
involved in the determination of estimated net realizable value
is inherently subjective since it requires estimates as to future
events and conditions. The estimated net realizable value of a
property may exceed the value which could be obtained through the
immediate sale of the property if development plans for such
property support a higher cost recovery.

The Company decided to wind down the Chicago Division due to
unfavorable results and prospects. As a result, a $1.1 million
charge was recorded in the fourth quarter of 1995 and is included
in Restructuring charges. The Company plans to dispose of the
remaining inventory primarily through the sale and buildout of
single family homes and the sale of the remaining finished lots.
Of the $1.1 million, $727,000 was applied as a reduction to
inventory. The Company anticipates that all of the inventory of
the Chicago division will be disposed of by the end of 1996.
Also included in Restructuring charges is $840,000 in severance
benefits, $200,000 of which resulted from the consolidation in
March 1995 of the New Jersey-North division and New Jersey-South
division; and $640,000 of which resulted for a severance
arrangement with the Company's former President.

Selling, general and administrative expenses decreased to
$18.8 million (10% of revenues) for the year ended November 30,
1995, compared to $20.2 million (12% of revenues) for the year
ended November 30, 1994. The decrease is principally due to
lower employee costs resulting from reductions in employee levels
and consolidation of operations in the Northeast completed early
in the second quarter of 1995.

Gross interest cost was approximately $7.1 million for the
year ended November 30, 1995, compared to $5.5 million for the
year ended November 30, 1994, respectively. The increase in
gross interest cost for the year ended November 30, 1995 resulted
from higher interest rates and to a lesser extent higher average
loan balances compared to the year ended November 30, 1994.
Interest capitalized in the year ended November 30, 1995 was $5.0
million compared to $4.0 million in the year ended November 30,
1994. The increase of capitalized interest is primarily a result
of higher interest rates. The capitalized amounts will reduce
future gross profit levels assuming no relative increases in
selling prices.

Included in Other income (expense) in 1995 is $890,000 which
represents payments received primarily in the fourth quarter in
connection with the dissolution and liquidation of Talcon, L.P.
("Talcon") in complete satisfaction of Talcon's debt obligations
to the Company. The Company had previously established a reserve
for all amounts owed to it by Talcon.

The Company, primarily as a result of the adoption of
fresh-start accounting and reporting in connection with its
Reorganization in 1993, has a tax basis in its assets held as it
exited its Reorganization substantially in excess of the carrying
value of these assets used for financial reporting purposes. As
a result of this difference in basis, the Company will realize a
tax benefit over time against future earnings. In accordance
with The American Institute of Certified Public Accountants
Statement of Position 90-7 ("SOP 90-7"), the Company is required
to provide a provision in lieu of taxes notwithstanding the fact
that there are no significant taxes payable and must record a
corresponding reduction in the amount of values in excess of
amounts allocable to identifiable net assets ("goodwill"), until
exhausted, then as a direct increase to Paid in capital. Results
for the year ended November 30, 1995 reflect a provision in lieu
of taxes for financial reporting purposes of $831,000, due to
recording the above-mentioned non-cash charges, and which is
primarily non-cash, and therefore does not impact the Company's
cash position, tangible net worth or earnings before interest,
taxes, depreciation and amortization ("EBITDA"). Goodwill was
fully extinguished during the year ended November 30, 1994 and an
increase of $719,000 was recorded to Paid in capital. The
effective rate of the 1994 provision in lieu of taxes was reduced
by approximately $700,000 as a result of a reduction in tax
reserves due to the resolution of a certain tax issue. The net
operating loss carryforwards and other deferred tax assets are
subject to utilization limitations as a result of the changes in
control of the Company that occurred in 1993 and 1995.

The distribution of the Company's stock has been shifting
significantly since May 31, 1993. This activity accelerated in
the last half of 1995 when the Company realized a greater than
fifty percent (50%) change in its ownership since its
Reorganization in 1993. The recognition of this event requires
that the Company recalculate the amount of the annual net
operating loss ("NOL") limitation. The preliminary estimate of
the Company's ability to use the NOL to offset future income is
approximately $1.7 million per year or approximately $22.0
million. See note 12 to the Company's consolidated financial
statements. While the change in ownership impacted the NOL,
management believes that the wider distribution of stock
represents a more positive and liquid ownership base for the
Company's common equity.

Net sales contracts of $108.7 million (496 homes) were
recorded by the Company during the year ended November 30, 1995,
representing decreases in the dollar value of contracts of 42%
compared to $188.9 million (951 homes) in the same period in
1994. At November 30, 1995, the backlog of homes under contract
totalled 166 homes having an aggregate dollar value of $36.0
million, reflecting decreases in the number of homes in backlog
and in backlog value of 60% and 63%, respectively, over the
levels at November 30, 1994 of 419 homes having an aggregate
dollar value of $98.5 million. Prior year results benefited from
a greater number of communities open for sale in the Florida
division, operating two divisions in the Northeast, and an
increasing interest rate environment which may have accelerated
home purchase decisions in the first nine months of 1994. Due to
market conditions, the number of new communities opened for sales
during fiscal 1995 decreased forty-two percent (42%) to seven
communities, six of which were in the Florida market. This
resulted in fewer communities open for sales during 1995 and a
reduction in the amount outstanding under the credit facility by
$15.0 million to $45.0 million by November 30, 1995. The average
price per home in backlog at November 30, 1995 decreased 8% to
approximately $217,000 compared to $235,000 at November 30, 1994
primarily due to the backlog in the Florida division representing
a higher proportion of the total backlog in 1995. The backlog in
both years includes contracts containing financing and other
contingencies customary in the industry, including contracts that
are contingent on the purchaser selling its existing home. Due
to changes in product offerings, the uncertainty of future market
conditions and the general economic environment, the sales
backlog, homes delivered, average selling prices and gross profit
achieved in the current and prior periods may not be indicative
of those to be realized in succeeding periods.

Pursuant to management's continued focus on its core
homebuilding business, the Company sold two of its commercial
properties in 1995 for approximately $8.1 million in addition to
the sale of one of its commercial properties in the fourth
quarter of 1994 for $800,000. The 1995 sales resulted in an
aggregate pre-tax gain of approximately $500,000 and provided
approximately $850,000 of additional cash for operations after
retirement of $6.9 million of mortgage debt.

Results of Operations for the Year Ended November 30, 1994
and the Six Month Periods ended November 30, 1993 and May 31,
1993

Economic and industry conditions including increased
unemployment and declining real estate values caused the Company
to file and consummate a "pre-packaged" plan of reorganization
under Chapter 11 of the United States Bankruptcy Code in the
second quarter of 1993. As a result of the Reorganization, the
Company's financial statements were restated to reflect the
estimated fair market value of individual assets in accordance
with the SOP 90-7. A reorganization value of $21.0 million as of
May 31, 1993 was established by the Company after consideration
of a range of values furnished by the Company's independent
advisors.

Due to the adoption of fresh-start accounting and reporting
in accordance with SOP 90-7, the Company's results of operations
for periods ending on or prior to May 31, 1993 are not comparable
to results experienced by the Company in subsequent periods
particularly in the areas of interest expense, cost of revenues
and gross profit. Accordingly, operating results for periods
subsequent to May 31, 1993 are separated by a black line from
periods ending on or prior to such date. The following
discussion of the results of operations is presented on a
comparative basis with reference to the impact of fresh-start
accounting and reporting where appropriate.

Revenues for the year ended November 30, 1994 were $168.7
million compared to revenues of $159.9 million for the year ended
November 30, 1993. Deliveries of 899 homes resulted in housing
revenues of $165.5 million for the year ended November 30, 1994.
For the year ended November 30, 1993, the Company delivered 860
homes which generated $157.3 million of housing revenues.
Revenues in 1994 increased five percent (5%) reflecting an
increase in deliveries and average selling prices to $184,000 for
the homes delivered during the year compared to $183,000 for the
homes delivered in 1993. This increase in average revenue per
home is consistent with the Company's plan to position itself in
upscale market segments in the Northeast with enhanced margin
potential and reduce its former concentration in entry level,
multi-family products in part, because of unfavorable demographic
trends and increasing regulatory costs. The five percent (5%)
increase in home deliveries in fiscal 1994 is attributable to the
improved land pipeline, a fifty-four percent (54%) increase of
home deliveries in the Florida division and the opening of
sixteen (16) new communities since the Reorganization in May
1993. The Company delivered substantially all of the remainder
of the California division's homebuilding inventory (50 home
deliveries) in fiscal 1994 compared to 116 homes delivered in
1993.

The Company's gross profit margin on homes delivered was
approximately seventeen percent (17%) during the year ended
November 30, 1994 compared to nineteen percent (19%) in the six
month period ended November 30, 1993. The Company had confronted
increased competition in a housing market that showed further
signs of slowing due, among other things, to increases in
mortgage rates. In addition, gross profit margins were
unfavorably impacted by construction labor and material cost
increases, interest rate increases and the impact of the timing
of certain start-up costs associated with opening a number of new
communities for sales within a short time span. Gross profit
margins were also impacted by the fact that the Company's land
pipeline, which was severely depleted when it completed its
Reorganization in May 1993, had been refilled in a transitional
market environment that reflected upward price pressures on land
that could not be entirely passed along to buyers in a rising
interest rate environment. The Company's gross profit margin on
homes delivered was approximately ten percent (10%) for the six
month period ended May 31, 1993. The increase in gross profit
margin in the six months ending November 30, 1993 was primarily
due to the adoption of fresh-start accounting and reporting as of
May 31, 1993 which included the revaluation of inventory to fair
market value. In the six months ended May 31, 1993, the Company
recorded non-cash charges to the provision for estimated net
realizable value of approximately $3.4 million to reflect certain
inventory and receivables at their estimated net realizable
value. For the year ended November 30, 1994, $400,000 was
recorded as a provision for net realizable value. There were no
such charges to the provision for estimated net realizable value
for the six months ended November 30, 1993.

Selling, general and administrative expenses decreased to
$20.2 million (12% of revenues) for the year ended November 30,
1994, compared to $10.1 million (12% of revenues) and $20.9
million (13% of revenues) for the six and twelve month periods
ended November 30, 1993. The decrease is principally due to
lower insurance costs and a reduction of legal and professional
fees.

Gross interest cost was approximately $5.5 million for the
year ended November 30, 1994, compared to $2.5 million and $7.2
million for the six and twelve month periods ended November 30,
1993, respectively. The decrease in gross interest cost for the
year ended November 30, 1994 resulted from lower average loan
balances (primarily due to the impact of the Reorganization)
compared to the year ended November 30, 1993. The increase of
$500,000 to $3.0 million for the six month period ended November
30, 1994 compared to the six month period ended November 30, 1993
is due to interest rate increases in the revolving credit
agreement during 1994. Interest capitalized in the year ended
November 30, 1994 was $4.0 million compared to $1.5 million and
$2.6 million in the six and twelve month periods ended November
30, 1993. The increase of capitalized interest is primarily a
result of higher inventory levels subject to capitalization and,
to a lesser extent, higher interest rates.

Equity in operations of joint ventures resulted in a loss of
$9.4 million for the six month period ended May 31, 1993. These
reflected non-cash write-offs primarily from Talcon investments
in certain joint ventures which resulted from the illiquidity of
such joint ventures and continued deterioration in the markets in
which they operate. Talcon's results had no effect on the
results of the Company for the year ended November 30, 1994 and
the six months ended November 30, 1993.

Reorganization charges for the six month period ended May
31, 1993 of $37.5 million reflects the successful consummation of
the Reorganization and the corresponding fresh-start accounting
and reporting which includes a $23.9 million inventory adjustment
to fair market value, $11.4 million write-off of the values in
excess of amounts allocable to identifiable net assets and $2.2
million of restructuring costs and other reserves incurred in the
debt restructuring. No such additional charges were reflected in
the year ended November 30, 1994 and the six months ended
November 30, 1993.

The Company recorded a charge against earnings of $800,000
in fiscal 1994 relating to a proposed offering of securities and
related working capital facility. The proposed offering was
terminated due to unfavorable conditions in the financial
markets. Results for the year ended November 30, 1994 and the
six month period ended November 30, 1993 reflected a provision in
lieu of income taxes for financial reporting purposes of $2.4
million and $1.9 million, respectively. This provision was
primarily non-cash and, therefore, did not impact the Company's
cash position, tangible net worth or EBITDA.

The Reorganization resulted in the discharge of
approximately $83.4 million of principal and interest due the
holders of 12-5/8% Subordinated and 16-5/8% Senior Subordinated
Notes in exchange for stock, warrants to purchase common stock,
cash and short term notes. An extraordinary gain of $58.3
million resulted for the six month period ended May 31, 1993
since the value of debt discharged was greater than the
consideration given in the exchange.

During the year ended November 30, 1994, the Company
recorded net sales contracts of $188.9 million (951 homes),
representing increases in the dollar value of contracts of
fifteen percent (15%) compared to $164.3 million (890 homes) in
the same period in 1993. At November 30, 1994, the backlog of
homes under contract totalled 419 homes having an aggregate
dollar value of $98.5 million, a record level at a fiscal year
end, reflecting increases in the number of homes in backlog and
in backlog value of fourteen percent (14%) and thirty-one percent
(31%), respectively, over the levels at November 30, 1993 of 367
homes having an aggregate dollar value of $75.0 million. The
average price per home in backlog at November 30, 1993 increased
fifteen percent (15%) to approximately $235,000 compared to
$205,000 at November 30, 1993. Management attributes these
favorable results to an improved land pipeline, the opening of
sixteen (16) new communities from May 31, 1993 through November
30, 1994 and the Company's strategic plan, including emphasis on
marketing and building higher priced single family detached homes
in the Northeast.

Pursuant to management's continued focus on its core
homebuilding business, the Company sold one of its commercial
properties in the fourth quarter of 1994 for approximately
$800,000. Although this sale did not generate any significant
profit or loss, it did result in a reduction of mortgages payable
of approximately $750,000.

Liquidity and Capital Resources

During the past several years, the Company has financed its
operations primarily from internally generated funds from home
sales and borrowings under its Amended Credit Agreement (the
"Facility"), which became effective upon the consummation of the
Reorganization. In February 1996, the Company amended its
Facility to meet anticipated operating results through the
remainder of the term of the Facility. In conjunction with the
Company's decision to exit from the Chicago market, the amended
Facility will permit borrowings of up to $55.0 million until
November 1, 1996, when the commitment is reduced to $50.0
million, subject to borrowing base and other limitations. The
amended Facility increased the interest rate charged to the
Company to the lender's prime rate (8.75% at November 30, 1995)
plus two percent (2%). The Company believes that the funds
generated by its operating activities, income tax payment
reductions derived from NOL utilization and borrowing
availability under the Facility will provide sufficient capital
to support the Company's operations and near term plans through
the term of the Facility; however, the Company will have to seek
an extension of the Facility or arrange replacement financing
prior to the expiration of the Facility on February 28, 1997.
Recent market conditions have resulted in a strategy to conserve
capital and reduce the amount outstanding under the Facility by
$15.0 million to $45.0 million at November 30, 1995. As of
November 30, 1995, approximately $3.5 million was available to be
borrowed under the Facility.

The February 1996 amendment to the Facility changed various
restrictions and financial covenants with which the Company is
required to comply, including covenants relating to cash basis
interest coverage, EBITDA and tangible net worth and limits the
amount which can be expended on land acquisition and land
development. Purchase money financing from other sources is
limited to $5.0 million under the Facility. Although these
limitations will restrict the Company's ability to expand its
business, the Company believes it will be able to comply with the
amended financial covenants based on its business plan. There
can be no assurance that, if market conditions deteriorate
further, the business plan levels will be met. For the year
ended November 30, 1995, the Company's EBITDA was $8.6 million
compared to $13.0 million in 1994. Certain subsidiaries of the
Company are guarantors of the obligations under the Facility.
The Lenders have a security interest in substantially all of the
assets of the Company and its subsidiaries, subject only to
certain permitted liens approved by the Lenders.

The number of lenders under the Facility has recently
decreased to four participants with Foothill Capital acquiring
thirty-seven and one-half percent (37-1/2%) of the Facility from
the Apollo Group and Fidelity Investments.

Interest rate increases will continue to impact the
Company's cost of capital and related interest costs. Increases
in capitalized interest could reduce future gross profit levels
assuming no relative increases in housing selling prices, EBITDA
however, would not be adversely impacted.

Cash Flows from Operating Activities

Inventories amounted to $64.2 million at November 30, 1995,
compared to $88.8 million at November 30, 1994. The decrease of
$24.6 million was primarily a result of fewer home deliveries,
offset to a lesser extent by land acquisitions totalling $10.5
million. Commercial properties were reduced by approximately
$7.2 million from the sale of two commercial buildings during the
year. In addition, inventories decreased by $1.6 million at
November 30, 1995 from non-cash writedowns to adjust primarily
two properties to estimated net realizable value and the
abandonment of nine properties under option resulting in a charge
of $1.1 million during the second quarter of 1995. The net
effect of reductions in residential and commercial inventories in
1995 was $27.9 million. Inventories amounted to $78.2 million at
November 30, 1993, $73.4 million at May 31, 1993 and $110.3
million at November 30, 1992. The increase in inventory from
November 30, 1993 to November 30, 1994 of $10.6 million was a
result of land acquisitions of $25.8 million during the year
which were offset by reductions in inventory levels through
deliveries. Of the $25.8 million in land acquisitions,
approximately $2.5 million was financed with purchase money
mortgage debt. The increase in inventory from May 31, 1993 to
November 30, 1993 of $4.8 million included: (i) the purchase of
$16.6 million of additional land primarily in New Jersey, and
(ii) the depletion of existing inventories of $11.8 million which
includes the effects of the wind down of the California
operations. The decrease in inventory from November 30, 1992 to
May 31, 1993 was primarily due to $23.9 million in non-cash
charges to adjust to fair market value in accordance with SOP
90-7 and, to a lesser extent, certain non-cash writedowns to
estimated net realizable value, partially offset with the
acquisition of approximately $8.2 million of land.

Receivables increased by approximately $1.1 million from
November 30, 1994 to November 30, 1995, primarily due to the
timing of home closings, offset to a lesser extent by reductions
in cash collateral held for performance guarantees that were
released in conjunction with the completion of communities during
the year. The $900,000 increase in receivables in 1994 is
attributable to the timing of home closings. Receivables
decreased by approximately $7.3 million at November 30, 1993
compared to November 30, 1992 primarily due to the refund of cash
collateral held for performance guarantees returned in exchange
for $4.0 million in letters of credit, and the timing of home
closings.

The Company will continue to seek opportunities to obtain
control of land for future projects at advantageous prices and
terms. Funds generated by the Company's operations will be
utilized for the acquisition of such properties. In addition,
borrowings from the Facility will be utilized for acquisitions as
needed, and to the extent available. Also, options will be
utilized to the extent possible to minimize risk, conserve cash
and maximize the Company's land pipeline. The Facility requires
approval of the Lenders for land acquisitions.

A $3.7 million decrease in accounts payable from $7.0
million at November 30, 1994, to $3.3 million at November 30,
1995, was the result of a decreased level of homebuilding
operations and communities under development. The decrease in
accrued expenses and other liabilities of $1.8 million from $16.7
million at November 30, 1994, to $14.9 million at November 30,
1995, was primarily the result of a $1.1 million credit taken in
the second quarter of 1995 from the reversal of a reserve
provided during the delivery period of a community that closed
out in early 1995. A $2.4 million increase in accounts payable
from $4.5 million at November 30, 1993 to $7.0 million at
November 30, 1994 was a result of an increased level of
homebuilding operations and communities under development. The
decrease in accrued expenses and other liabilities of $3.0
million from $19.7 million at November 30, 1993 to $16.7 million
at November 30, 1994 was the result of payments made in
conjunction with litigation settlements, the Talcon dissolution
and the California winddown. In addition, a $700,000 reserve
related to a certain tax issue was reversed.

Cash Flows from Investing Activities

At November 30, 1995, 1994 and 1993, investments in joint
ventures amounted to $850,000, which consists primarily of a
partnership interest in a joint venture located in Maryland. The
Company expects to realize this amount when the joint venture
activities are completed in 1996.

In 1995, Talcon, a limited partnership formed by the Company
in 1987, paid the Company $890,000 in full satisfaction of its
debt obligations to the Company. The Company had previously
established a reserve for all amounts owed to it by Talcon and,
as a result, the payment received in 1995 was classified in Other
(income) expense.

Cash Flows from Financing Activities

The aggregate principal amount of loans outstanding under
the Facility was $45.0 million at November 30, 1995, $60.0
million at November 30, 1994, and $55.0 million at November 30,
1993. The $15.0 million decrease since November 30, 1994
occurred during the second half of 1995 in conjunction with the
Company's recent strategy to reduce inventory levels, improve the
Company's financial condition and due to a restrictive covenant
of the Facility. This covenant requires the Company to reduce
outstanding borrowings to the extent that the amount held in its
collateral deposit account with the lenders' collateral agent
exceeds $6.5 million. The amount outstanding had increased from
November 30, 1993, to November 30, 1994, primarily due to land
acquisitions.

The Company utilizes mortgages payable, when available, to
finance a portion of its acquisitions. Mortgages payable
decreased to $1.2 million at November 30, 1995, from $9.4 million
at November 30, 1994, as a result of the repayment of
approximately $6.9 million of the proceeds from the sale of two
of its commercial properties and payment under a purchase money
mortgage of $1.3 million.

Inflation

The Company, as well as the homebuilding industry in
general, may be adversely affected by inflation, which can cause
increases in the price of land, raw materials and labor. Unless
cost increases are recovered through higher sales prices, gross
margins can decrease. Increases in interest rates result in
higher construction and financing costs which can also adversely
affect gross margins. In addition, increases in home mortgage
interest rates make it more difficult for the Company's customers
to qualify for mortgage loans, potentially reducing the demand
for homes. Historically, the Company, in periods of high
inflation, has generally been able to recover increases in land,
construction, labor and interest expenses through increases
selling prices; however, the Company believes that its gross
margins in 1994 and 1995 were adversely impacted by increased
costs which could not be entirely passed through to buyers. See
"Results of Operations."

BUSINESS

The Company designs, constructs and sells single family
attached and detached homes primarily in central New Jersey,
central Florida and eastern Pennsylvania . The Company has an
established reputation in its markets, having constructed and
sold over 16,550 homes in 138 residential communities during the
last 26 years. The Company markets primarily to first time
buyers and first and second time move-up buyers and delivered 749
homes in fiscal 1995 having an average sales price of
approximately $229,000.

The Company was offering homes for sale in 20 residential
communities at November 30, 1995, with prices ranging from
$97,000 to $473,000. At November 30, 1995, the backlog of homes
under contract was $36 million, compared to $98.5 million at
November 30, 1995, and consisted of 166 homes having an average
sales price of $217,000. The 1994 backlog levels benefitted from
a greater number of communities open for sale in the Florida
division, operating two divisions in the Northeast and an
increasing interest rate environment which may have accelerated
home purchase decisions in the first nine months of the year
compared to the comparable period in fiscal 1995. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations."

At November 30, 1995, the Company owned or controlled
approximately 2,835 lots, consisting of 919 lots in its 20
residential communities and 1,916 lots located on 15 parcels of
land which primarily are controlled through option agreements and
which, in a number of cases, are subject to the satisfactory
completion of feasibility studies and the receipt of all required
approvals.

The Company's operating strategy consists of: (i) targeting
the first time homebuyer and the first and second time move-up
buyer; (ii) conducting homebuilding activities in markets that,
based on economic and demographic trends, demonstrate strong
growth potential; (iii) designing each residential community to
meet the needs of the particular market based on local conditions
and demographic factors; (iv) minimizing land risks by purchasing
entitled tracts of well-located property through options or
contingent purchase contracts and limiting land holdings to those
which can be developed within two years from the date of
purchase; (v) developing residential projects in phases which
enables the Company to reduce financial exposure, control
construction and operating expenses and adapt quickly to changes
in customer demands and other market conditions; (vi) utilizing
subcontractors to perform land development and home construction
on a fixed price basis; and (vii) emphasizing the quality and
value of its homes.

Operating Strategy

Key elements of the Company's operating strategy include:

Acquiring Tracts of Well-Located Property. The Company
selects locations for its residential housing communities that
have ready access to metropolitan areas by public transportation
and major arterial highways and which have experienced industrial
and commercial growth. The Company acquires land for future
development principally through the use of land options which
need not be exercised before the completion of the regulatory
approval process. The Company structures these options in most
cases with flexible takedown schedules rather than with an
obligation to take down the entire parcel at one time. Before
acquiring a parcel of land the Company completes extensive
studies and analyses as to the economic feasibility and
environmental suitability of the proposed community and generally
obtains substantially all governmental approvals required for the
development of the property. This strategy enables the Company
to minimize the economic costs and risks of carrying a land
inventory, while maintaining the Company's ability to commence
new developments during favorable market periods.

Limiting Land Holdings. The Company generally limits the
amount of land it owns to amounts expected to be developed within
two years or less in an effort to match land costs with current
market prices for finished homes.

Controlling Costs. The Company controls costs by: (i)
developing residential communities of a size which permits the
Company to take advantage of certain economies of scale; (ii)
generally beginning construction only when homes are under
contract; (iii) hiring subcontractors on a fixed-price basis; and
(iv) limiting the size of each construction phase to reduce
inventory carrying costs. In addition, the Company generally
standardizes and limits the number of home designs within any
given product line. This standardization improves the quality of
construction and permits efficient production techniques and bulk
purchasing of materials and components, thus reducing
construction costs and the time required to build a home.

Building in Phases. By developing its projects in phases,
the Company believes it is able to adapt quickly to changes in
customer demands and other market conditions. The Company
monitors its sales activity and varies its product mix and/or
focuses more heavily upon particular projects and products to
meet perceived changes in demand.

Corporate Operations

The Company operates through separate divisions, which are
located within or near the areas in which they operate. Each
division is managed by executives with substantial experience in
the markets served. In addition, each division is staffed with
personnel equipped with the skills to complete the functions of
land acquisition, entitlement processing, land development,
construction, marketing, sales and product service.

The Company's corporate staff is responsible for: (i)
evaluating the suitability of and selecting geographic markets;
(ii) allocating capital resources among divisions; (iii)
maintaining the Company's relations with its lenders to regulate
the flow of financial resources; and (iv) monitoring the
decentralized operations of the Company's divisions. Capital
commitments are determined through consultation among senior
management and division managers. Centralized financial controls
are also maintained through the standardization of accounting and
financial policies and procedures, which are applied uniformly
throughout the Company.

Geographic Markets

The Company's current business operations are principally
located in central New Jersey, the greater Orlando area and
eastern Pennsylvania. Generally, the Company has organized
divisions to be located in markets that demonstrate a strong
growth profile. The Company selects locations within these
markets for its residential housing communities that have ready
access to metropolitan areas by public transportation and major
arterial highways and which have experienced industrial and
commercial growth.

The Company's Northeast Division conducts homebuilding
activities in Burlington, Monmouth, Middlesex and Mercer counties
in New Jersey and Bucks County in Pennsylvania. The Company's
Florida division conducts homebuilding activities in the Orange
and Seminole county areas, concentrating on the suburban Orlando
area.

The Company recently decided to wind down its Chicago
division by disposing of the remaining inventory by a combination
of sale and buildout of homes, and the sale of remaining lots.

The Company does not anticipate that it will expand into any
new markets in fiscal 1996 and, therefore, plans to focus its
operating locations and available capital in the Northeast and
Florida divisions.

Land Acquisition, Planning and Development

Substantially all of the land acquired by the Company is
purchased only after necessary entitlements have been obtained so
that the Company has certain rights to begin development or
construction as market conditions dictate. The term
"entitlements" refers to developmental approvals, tentative maps
or recorded plats, depending on the jurisdiction within which the
land is located. Entitlements generally give a developer the
right to obtain building permits upon compliance with certain
conditions that are usually within the developer's control.
Although entitlements are ordinarily obtained prior to the
Company's purchase of the land, the Company is still required to
obtain a variety of other governmental approvals and permits
during the development process. The Company primarily buys
finished lots that are ready for construction in the Florida
market while finished lots are generally not available in the
Northeast market.

The Company's general policy has been to control land for
future development through the use of purchase options or
contingent purchase contracts whenever practicable and where
market conditions permit. The Company endeavors to acquire
property either on an installment method, with closings on a
portion of a project on a periodic basis, or subject to purchase
money mortgages. These policies enable the Company to limit its
financial commitments, including cash expenditures and interest
and other carrying costs, and avoid large land inventories which
exceed the Company's immediate development needs. At the same
time, the Company retains any appreciation in the value of the
parcel prior to exercising the option or closing the contingent
purchase contract. During the option or contingency period, the
Company performs feasibility studies, technical, engineering and
environmental surveys and obtains the entitlements.

In making land acquisitions, the Company considers such
factors as: (i) current market conditions; (ii) internal and
external demographic and marketing studies; (iii) environmental
conditions; (iv) proximity to developed and recreational areas;
(v) availability of mass transportation and ready access to
metropolitan areas and other employment centers; (vi) industrial
and commercial growth patterns; (vii) financial review as to the
feasibility of the proposed community, including projected profit
margins, returns on capital employed and payback periods; (viii)
the ability to secure governmental approvals and entitlements;
(ix) customer preferences; (x) access to materials and
subcontractors; and (xi) management's judgment as to the real
estate market, economic trends and the Company's experience in a
particular market. The Company's development activities include
land planning and securing entitlements. These activities are
performed by the Company's employees, together with independent
engineers, architects and other consultants. The Company's
employees also carry out long-term planning for future
communities.

Homebuilding

Products. The Company offers a variety of homestyles
tailored to meet the specific needs of the particular geographic
and demographic markets served, including the first-time and
second-time move-up buyer and, to a lesser extent, the first-time
buyer. The Company believes that this diversified product
strategy enables it to mitigate some of the risks inherent in the
homebuilding industry by providing it with the flexibility to
adjust its product mix to suit particular markets and changing
market conditions. Homestyles, prices and sizes vary from
community to community based upon the Company's assessment of
specific market conditions and the restrictions imposed by local
jurisdictions. In certain projects, recreational amenities such
as tennis courts and playground areas are constructed by the
Company.

The Company generally standardizes and in recent years has
limited the number of home designs within any given product line.
This standardization improves the quality of construction and
permits efficient production techniques and bulk purchasing of
materials and components, thus reducing construction costs and
the time required to build a home. The Company offers a variety
of options and upgrades for each of its homes, thereby permitting
buyers to tailor the homes to their particular tastes while
enabling the Company to maintain the efficiency of a production
builder.

Construction. The Company employs production managers who
are responsible for coordinating all functions pertaining to the
construction process. All construction work for the Company is
performed by subcontractors on a fixed price basis, with the
Company acting as general contractor. In order to maintain
control over costs, quality and work schedules, the Company
employs an on-site superintendent for each project who is
responsible for supervising subcontractor work.

The Company's housing is constructed according to
standardized design plans. Generally, the Company seeks to
develop communities having a minimum number of lots to absorb
deliveries over at least a two year period in order to reduce the
per unit cost of the housing products which it sells. Advantages
achieved by volume building include lower unit prices paid to
subcontractors and reduced material costs per unit. From time to
time, the Company purchases smaller sized projects in order to
more efficiently deploy Company resources.

Generally, the Company's policy is to commence construction
of: (i) a detached housing unit beyond the foundation after a
sales contract for that unit has been signed; and (ii) a
multi-unit townhouse building after 50% of the units in that
building are under sales contracts. The Company does, however,
ordinarily attempt to maintain a predetermined inventory of units
in process and model homes in order to match the construction
time of homes with the mortgage application process and to
accommodate customers who require immediate occupancy, such as
relocation buyers. In addition, in order to permit construction
and delivery of housing units on a year round basis, the Company,
in anticipation of winter, starts construction of foundations
prior to having signed sales contracts in affected market
locations.

Materials and Subcontractors. The Company attempts to
maintain efficient operations by utilizing standardized material
available from a variety of sources. Prices for materials may
fluctuate due to various factors, including demand or supply
shortages. During 1995, major building material prices for
lumber, asphalt and appliances remained flat while prices for
concrete and plastic increased modestly. The price for gypsum
increased sharply during the first half of the year and decreased
gradually during the second half of the year.

The Company contracts with numerous subcontractors
representing all building trades in connection with the
construction of its housing units, and has established long-term
relationships with a number of subcontractors. These
subcontractors bid competitively for each phase of the work at
each project and are selected based on quality, price and
reliability. Subcontractor bids are solicited after an internal
job cost budget estimate has been prepared based on estimated
material quantities and home prices. These internal estimates
serve as the formal baseline budget against which job cost
performance is measured. Each division is responsible for
contracting all work on its projects. Production costs are
monitored monthly to assess variances from contracted amounts.
The Company closely monitors subcontractor performance and
expenditures on each project to assess project profitability.
Additionally, the Company is generally able to obtain reduced
prices from many of its subcontractors due to the high volume of
work it provides to its subcontractors. Agreements with
subcontractors are generally short term, running from six to
twelve months, and provide a fixed price for labor and materials.

The Company has, from time to time, experienced temporary
construction delays due to delays in the delivery of materials or
availability of subcontractors. Such construction delays may in
turn delay the closing of dwelling unit sales, thereby extending
the period of time between the signing of a purchase contract
with respect to a dwelling unit and the receipt of revenues by
the Company. To date, the Company has experienced no material
adverse financial effects as a result of construction delays.
Currently, sufficient materials and subcontractors are available
to meet the Company's demands; however, the Company cannot
predict the extent to which shortages in necessary materials or
labor may occur in the future.

Sales and Marketing

Sales Personnel/Advertising. Each division establishes
marketing objectives, determines retail pricing, formulates sales
strategies and develops advertising programs which, in each case
are subject to periodic market analyses conducted by the
division. The Company typically constructs, furnishes and
landscapes model homes for each project and maintains on-site
sales offices staffed by its own sales personnel. The Company
makes use of newspaper, billboard and direct mail advertising,
special promotional events and illustrated brochures in a
comprehensive marketing program. In marketing its products, the
Company emphasizes quality and value and provides a 15 year
warranty on its homes.

During the fourth quarter of 1995, the "Your Home Your Way"
customization program was introduced in order to make the
products the Company builds more attractive to homebuilders by
tailoring them to individual customer needs.

The Company's sales personnel participate in an intensive
sales training program to develop their skills and knowledge.
The Company consults with these personnel in the product
development process regarding feedback from customers and
information with respect to the Company's competitors.

Customer Financing. The Company sells its homes to
customers who generally finance their purchase through
conventional and government insured mortgages. The Company
provides its customers with information on a wide selection of
conventional mortgage products and various mortgage lenders to
assist the homebuyer through the mortgage process. Mortgages
arranged by the mortgage providers in recent years have been
mortgage loans underwritten and made directly by a lending
institution to the customer. The Company is not liable for
repayment of any mortgage loans.

Sales Agreements. Sales of the Company's housing units are
made pursuant to standard sales contracts that are normal and
customary in the markets served by the Company. Such contracts
require a customer deposit (generally 5% unless limited by local
law) at time of contract signing and provide the customer with a
mortgage contingency. The contingency period typically is 60
days following the execution of the contract. In certain
instances, contracts are contingent on the sale of a purchaser's
existing home. In such cases, the Company retains the right to
sell the home to a different buyer during the period in which the
"house to sell" condition is not satisfied. The cancellation
rate for new contracts signed was approximately 23% for fiscal
1995. Cancellation rates may vary from year to year. The
Company attempts to limit cancellations by training its sales
force to determine at the sales office the qualifications of
potential homebuyers and by obtaining financial information about
the prospective purchaser.

Residential Development

The Company markets and sells varying types of residential
housing units ranging in base selling prices from $97,000 to
$473,000. Current average base selling prices for the Company's
homes are approximately $256,000 in New Jersey, $146,000 in
Orlando and $229,000 in Chicago. Average base selling prices of
units sold in any period or unsold at any point in time will vary
depending on the specific projects and style of homes under
development. The Company continually monitors prevailing market
conditions, including interest rates and the level of resale
activity in the markets in which it operates. The Company may
from time to time, sell all or a portion of any residential
project prior to its development by the Company.

At November 30, 1995, the Company had 20 residential
communities which include an aggregate of 1,078 single family
detached homes to be delivered.

The following sets forth certain information as of November
30, 1995 with respect to communities being developed by each of
the Company's operating divisions:

<TABLE>
<CAPTION>
Homes
Delivered
Year Homes
Year of Ended Under
First Lots Homes November Contract Unsold Sales
Delivery Approved Delivered 30, 1995 (Backlog) Lots Price Range
(a) (b)
<S> <C> <C> <C> <C> <C> <C> <C>
Northeast
Belmont at Steeplechase (Burlington) . 1995 382 24 24 10 348 $169,990-$221,990
Burlington (Burlington Twp) .......... 1990 433 394 73 6 33 $138,990-$164,990
Four Maples (Freehold) ............... 1995 56 23 33 6 17 $303,990-$396,990
Jockey Club at Steeplechase
(Burlington) ........................ 1995 177 47 47 21 109 $137,990-$161,990
Manalapan Chase (Manalapan) .......... 1996 52 0 0 4 48 $311,990-$415,990
Monmouth Ridings (Howell) ............ 1994 144 87 56 17 40 $179,990-$243,990
Oakleigh Farm (Buckingham PA) ........ 1994 48 37 35 3 8 $269,990-$370,990
Regency Oaks (Marlboro) .............. 1995 39 17 17 3 19 $333,990-$472,990
Sagewood (Mt. Laurel) ................ 1994 50 42 19 3 5 $253,990-$367,990
Waterford Estates (W. Windsor) ....... 1994 66 46 41 7 13 $344,990-$408,990
Woodside (Washington) ................ 1994 68 54 45 9 5 $245,990-$308,990
Total 1,515 781 390 89 645

Orlando, Florida
Beechwoods (Altamonte Springs) ....... 1995 57 11 11 9 37 $131,900-$156,990
Cambridge Commons (Apopka) ........... 1995 87 23 23 8 56 $ 96,990-$122,990
Churchill Downs (Orange) ............. 1995 32 3 3 8 21 $121,990-$172,990
Crescent Park (Orlando) .............. 1995 108 12 12 10 86 $153,990-$196,990
The Meadows (Oricho) ................. 1995 30 9 9 5 16 $140,990-$176,990
Saddlebrook (Ocoee/Windmere) ......... 1995 32 18 18 10 46 $129,990-$183,990
Wekiva Park B (Apopka) ............... 1994 42 31 15 1 10 $ 99,990-$120,990
Total 388 107 91 51 230

Chicago, Illinois
Braeburn (Crystal Lake) .............. 1995 41 10 10 14 17 $192,400-$227,990
Delaware Crossing (Gurnee) ........... 1995 65 33 33 6 26 $195,000-$232,990
Total 106 43 43 20 43

Other (Communities with less than
5 unsold homes each)(c) .............. 216 209 42 6 1
TOTAL 2,225 1,140 566 166 919
</TABLE>
_______________

(a) Includes dwelling units completed and delivered, units under construction
and units designated on subdivision or site plans where preliminary and final
subdivision or site plan approvals, which in certain instances may be subject
to the fulfillment of certain conditions imposed thereby, have been
received. Also includes approximately 385 planned homes under option in
5 communitiesin New Jersey and Florida currently being developed and marketed
by the Company, and will require cash of $3.1 million in 1996, $1.2 million
in 1997 and $850,000 in 1998.

(b) Does not include 183 deliveries in 1995 from communities that have been
fully delivered.

Land Inventory

The Company acquires options or contingent purchase con-
tracts on land whenever practicable and where market conditions
and lending availability permit. In other instances, the Company
has endeavored to acquire property either subject to purchase
money mortgages, or on an installment method, with closings on a
portion of a project on a periodic basis. In order to ensure the
availability of land for future development, the Company believes
it is necessary to control land in New Jersey at an earlier point
in time than in other markets. As of November 30, 1995, if all
of the options held by the Company were exercised and all of the
contingent purchase contracts to which the Company is a party
were closed, the Company would have sufficient land to maintain
its anticipated level of sale activity for the next five years in
the Northeast market. The Company believes that additional
acquisitions will be required for deliveries in 1997 and beyond
in the Florida market. The Company's Amended Credit Agreement
contains provisions limiting the amount of land which the Company
may acquire in any one year (other than land acquisitions
utilizing proceeds of purchase money mortgages) to $18.8 million
in 1996. In addition, the Amended Credit Agreement provides that
total expenditures with respect to projects which have not
received all requisite development approvals cannot exceed $2
million without the consent of the Company's lenders.

The following table sets forth certain information, as of
November 30, 1995, with respect to: (i) options held by the
Company and contingent purchase contracts to which the Company is
a party; and (ii) land owned by the Company with respect to which
construction of housing units has not commenced.

Number of
Proposed
Residential Planned
Communities Homes(1)

Northeast:
Under option .................. 10 1,517
Owned ......................... -- --
Total ........................ 10 1,517

Orlando, Florida:
Under option .................. 3 293
Owned ......................... 2 106
Total ........................ 5 399

Combined Total ................. 15 1,916

(1) Final development approvals have not been obtained with
respect to certain properties included in the above table.
Accordingly, the number of units approved for development,
if any, may differ from the number of planned units
reflected in the table. In addition, prior to exercising an
option or closing a contingent purchase contract, the
Company conducts feasibility studies and other analyses with
respect to a proposed community. In certain instances, a
determination is made by the Company not to proceed with the
project. Accordingly, no assurance can be given that the
Company will ultimately pursue the development of every
community reflected in the table above.

As of November 30, 1995, the Company held options or was a
party to contingent contracts to purchase 13 parcels of land in
New Jersey and Florida for which it has paid option fees and
earnest money aggregating $2.2 million. A total of 1,446 housing
units of varying types are planned for these parcels. Through
November 30, 1995, the Company has spent an additional $1.2
million in predevelopment costs on such land, which costs would
not be recoverable in the event these options were not exercised
or the contracts were not closed, as the case may be. Assuming
that in each year the Company makes payments with respect to
either options or contingent contracts, exercises options or
closes such contracts with respect to the minimum amount of land
necessary to retain its rights to acquire the remainder of the
subject properties, the aggregate amount required to retain or
exercise such options or close or extend such contingent
contracts in periods subsequent to August 31, 1995 is
approximately $17.7 million in 1996, $12.4 million in 1997, $8.3
million in 1998, $2.3 million in 1999 and $718,000 in 2000, and
$1.5 million thereafter. In addition, the acquisition of two of
such parcels will be financed through purchase money mortgages.
The terms of payment call for mortgage releases as homes close in
the communities with a minimum of $1.2 million due in 1997 and
$1.1 million due in 1998, $450,000 due in 1999 and $450,000 due
in 2000. Assuming the Company exercises such options and
contingent contracts, the Company will be in a position to
acquire title to approximately 554, 386, 393, 189 and 251 lots
during fiscal years 1996 through 2000 and 337 lots thereafter.

Commercial Land and Buildings

The Company currently owns a 12,800 square foot office
building in Manalapan, Monmouth County, New Jersey. Pursuant to
management's continued focus on its core homebuilding business,
the Company sold two of its commercial properties in 1995 for
approximately $8.1 million which reduced related mortgages
payable of $6.9 million. The sales resulted in an aggregate
pre-tax gain of approximately $500,000 and provided approximately
$850,000 of additional cash for operations after retirement of
the mortgage debt.

In addition, the Company owns certain undeveloped properties
in New Jersey, Florida, California and Pennsylvania. These
properties include 60 acres of commercial property in Manalapan,
New Jersey, 27 acres consisting of three parcels in Orange
County, Florida and five other properties, two in Pennsylvania,
two in New Jersey and one in California. Each of these
properties are currently available for sale.

Joint Ventures

The Company has historically participated in joint ventures
engaged in land and residential housing development. The Company
currently has a 50% equity interest in one joint venture formed
to develop and market an 80 unit townhouse project in Maryland,
which had delivered 75 homes through November 30, 1995. In
addition, $550,000 of the amount reflected on the Company's
Consolidated Balance Sheet at November 30, 1995 as Investments in
Joint Ventures is held as collateral by a lender to collateralize
letters of credit issued for the benefit of this joint venture.
Talcon, L.P., a Delaware limited partnership ("Talcon") was
formed by the Company in 1987 to succeed to its interest in
certain joint ventures. In January 1994, Calton Capital, Inc. (a
wholly owned subsidiary of Calton and the general partner of
Talcon) determined that it was no longer in the best interest of
Talcon or its partners to continue Talcon's business and
dissolved the partnership. In 1995, the Company received
$890,000 of payments in full satisfaction of Talcon's debt
obligations to the Company.

Competition

The Company's business is highly competitive. Homebuilders
compete for desirable properties, financing, raw materials and
skilled labor, among other things. The Company competes in each
of the geographic areas in which it operates with numerous real
estate developers, ranging from small local to larger regional
and national builders and developers, some of which have greater
sales and greater financial resources than the Company. Resales
of housing provide additional competition. The Company competes
primarily on the basis of reputation, price, location, design,
quality and amenities.

Regulation and Environmental Matters

General. The Company is subject to various local, state and
federal statutes, ordinances, rules and regulations concerning
zoning, building design, construction and similar matters,
including local regulation which imposes restrictive zoning and
density requirements in order to limit the number of homes that
can eventually be built within the boundaries of a particular
locality. In addition, the Company is subject to registration
and filing requirements in connection with the construction,
advertisement and sale of its communities in certain states and
localities in which it operates even if any or all necessary
government approvals have been obtained. Generally, the Company
must obtain numerous governmental approvals, licenses, permits
and agreements before it can commence development and
construction. Certain governmental authorities impose fees as a
means of defraying the cost of providing certain governmental
services to developing areas, or have required developers to
donate land to the municipality or to make certain off-site land
improvements. The Company may also be subject to periodic delays
or may be precluded entirely from developing communities due to
building moratoriums that could be implemented in the future in
the states in which it operates. Generally, such moratoriums
relate to insufficient water or sewage facilities or inadequate
road capacity.

Environmental. The Company is also subject to a variety of
local, state and federal statutes, ordinances, rules and
regulations concerning protection of health and the environment
("environmental laws"). The particular environmental laws which
apply to any given community vary greatly according to the
community site, the site's environmental conditions and the
present and former uses of the site. These environmental laws
may result in delays, may cause the Company to incur substantial
compliance and other costs, and can prohibit or severely restrict
development in certain environmentally sensitive regions or
areas. For example, in July 1987, New Jersey adopted the Fresh
Water Wetlands Protection Act which restricts building in or near
certain protected geographic areas designated as wetlands. The
preservation of wetlands located within a project may lessen the
number of units that may be built in a particular project. The
Company has planned all of its projects containing wetlands to
comply with the regulations adopted under the Fresh Water
Wetlands Protection Act and does not believe that this
legislation will adversely affect its present development
activities in New Jersey.

The State of Florida has adopted a wide variety of other
environmental protection laws. The laws regulate developments of
substantial size and developments in or near certain specified
geographic areas within the State of Florida, including the Big
Cypress, Green Swamp and Florida Keys areas, imposing
requirements for development approvals which are more stringent
than those which the Company would have to meet in Florida for
development outside of these geographic areas. Further, the
State of Florida regulates certain types of developments and
developments located in or near certain types of geographic
areas, plant life or animal life. The Company does not believe
that any land owned by it that is planned for development is the
site of any protected plant or animal life. Although the Company
owns land in or near certain protected types of geographic areas,
the Company designs its various projects to avoid disturbing such
areas so that certain regulations with respect to these areas are
not applicable. When the Company undertakes development activity
in or near or which may have an impact on any protected areas, it
is required to satisfy more stringent requirements for
developmental approval than would otherwise be applicable. In
addition, the laws of the State of Florida require the use of
construction materials which reduce the energy consumption
required for heating and cooling.

Florida Growth Management Act. The Florida Growth
Management Act of 1985 requires that an infrastructure, including
roads, sewer and water lines, must be in existence concurrently
with the construction of the development. If such infrastructure
will not be concurrently available, then the project cannot be
developed. This will have an effect on limiting the amount of
land available for development and may delay construction and
completion of some developments.

Fair Housing Act. In July 1985, New Jersey adopted the Fair
Housing Act which established an administrative agency to adopt
criteria by which municipalities will determine and provide for
their fair share of low and moderate income housing. This agency
promulgated regulations with respect to such criteria effective
August 1986. The Fair Housing Act could result in the reduction
in the number of units available for future New Jersey properties
acquired.

The Company may be required to set aside units at prices
affordable to persons of low and moderate income (Mt. Laurel
units) in certain municipalities in which it owns or has the
right to acquire land. In order to comply with such require-
ments, the Company may be required to: (i) sell some units at
prices which would result in no gain or loss and an operating
margin less than would have resulted otherwise; or (ii)
contribute to public funding of affordable housing, which
contribution will increase the costs of units to be developed in
a project. The Company attempts to recover some of these
potential losses or reduced margins through increased density,
certain cost saving construction measures and reduced land prices
for the sellers of property. The Company has currently set aside
56 Mt. Laurel units in one New Jersey project for sale in future
years.

Summation. Despite the Company's past ability to obtain
necessary permits and development approvals for its projects, it
can be anticipated that increasingly stringent requirements will
be imposed on developers and homebuilders in the future.
Although the Company cannot predict the effect of these
requirements, they could result in time consuming and expensive
compliance programs and substantial expenditures for pollution
and water quality control, which could materially adversely
affect the Company. In addition, the continued effectiveness of
permits already granted or development approvals already obtained
is dependent upon many factors, some of which are beyond the
Company's control, such as changes in policies, rules and
regulations and their interpretation and application.

The foregoing does not purport to be a full description of
all of the legislation and regulations impacting the business of
the Company. The Company may be subject to numerous other
governmental rules and regulations regarding building standards,
labor practices, environmental matters and other aspects of real
estate development in each jurisdiction in which it does
business.

Employees

As of February 1, 1996, the Company employed approximately
112 full-time personnel, including 15 corporate employees, 58
employees in the Northeast Division, 32 employees in the Florida
Division and seven employees in the Chicago Division. The
Company also employs approximately 23 part-time employees in
various locations. The Company believes its employee relations
are satisfactory.

Company Facilities

The Company leases approximately 19,413 square feet of
office space (of which 3,629 are sublet to tenants) and 6,200
square feet of storage space in a two-story office building in
Manalapan, New Jersey which houses the Company's corporate
headquarters and its New Jersey division. In addition, the
Company leases 7,200 square feet of office space in Florida and
2,400 square feet of office space in Illinois. Management
believes that these arrangements provide adequate space for the
Company to conduct its operations.

The Company has remote sales offices and construction
offices on each of its project sites, some of which include
mobile units which are leased for terms varying from one month to
48 months. From time to time the Company also leases model homes
in some of its projects which the Company has previously sold to
third parties under a lease-back arrangement. The current leases
on the model homes do not obligate the Company beyond six months.

Legal Proceedings

In July 1994, an action was filed against Calton Homes, the
Township of Plainsboro, New Jersey and its planning board,
certain real estate brokers and certain unnamed officers of
Calton Homes in the Superior Court of New Jersey, Middlesex
County, by approximately 60 purchasers of homes in the Company's
Princeton Manor development seeking compensatory and punitive
damages arising out of an alleged failure to disclose that a
portion of the property adjacent to the community could be
developed by Plainsboro Township as a public works site. The
court has denied the plaintiffs' motion to have the matter
certified as a class action and has also denied the plaintiffs'
motion for a preliminary injunction. No significant discovery
has occurred to date. The Company is vigorously contesting this
matter and, although there can be no assurances, does not believe
that the case will have any material effect on the Company. In
addition, the Company believes that it is contractually entitled
to indemnification from Plainsboro Township in the event that any
liability should arise.

MANAGEMENT

Directors and Executive Officers of Calton

The directors and executive officers of Calton as of March
15, 1996 are listed below. Brief summaries of the business
experience and certain other information with respect to the
directors and executive officers of Calton is set forth in the
following table and in the information which follows the table.

Name Age Position

Anthony J. Caldarone 58 Chairman, President, Chief
Executive Officer and Director
Robert A. Fourniadis 38 Senior Vice President-
Legal & Secretary
Bradley A. Little 45 Senior Vice President-
Finance, Treasurer and
Chief Financial Officer
J. Ernest Brophy 71 Director
Mark N. Fessel 39 Director
Frank Cavell Smith, Jr. 50 Director
_______________

There are no family relationships among the executive
officers or directors of the Company. In addition, there are no
arrangements or understandings between any of the above named
executive officers or directors and any other persons pursuant to
which any of the above named persons was elected as an officer or
director. Although certain of the current directors were
originally designated by the holders of the Old Notes pursuant to
the Plan of Reorganization, such arrangements are no longer in
effect.

Mr. Caldarone was reappointed as Chairman, President, Chief
Executive Officer and a Director of Calton in November 1995,
having previously served in such capacities from the inception of
the Company in 1981 through May 1993 when the Company consummated
the Plan of Reorganization. From June 1993 through October 1995,
Mr. Caldarone served as a Director of the Company.

Mr. Fourniadis was named Senior Vice President-Legal,
Secretary and Corporate Counsel of Calton in June 1993. Prior
thereto, Mr. Fourniadis served as Vice President and Corporate
Counsel of Calton Homes from 1988 to 1993. Mr. Fourniadis joined
the Company in 1987.

Mr. Little was named Senior Vice President-Finance,
Treasurer and Chief Financial Officer of Calton in June 1993.
Prior thereto, Mr. Little had served as Vice President of
Accounting of Calton from 1989 to June 1993. From 1986 to 1989,
Mr. Little was employed by Amerada Hess Corporation as Manager,
Corporate Accounting and Reporting.

Mr. Brophy, a self-employed attorney and certified public
accountant specializing in tax consultation to clients engaged in
the construction business, was reappointed as a Director of
Calton in November 1995, having served in such capacity from
March 1983 through November 1985 and from April 1986 until
through May 1993 when the Company and certain of its subsidiaries
consummated a joint plan of reorganization under Chapter 11 of
the United States Bankruptcy Code (the "Plan of Reorganization").
Since 1992, Mr. Brophy has served as Chief Financial Officer and
a director of Hurdy-Gurdy International, Inc., a company that
markets sorbet products.

Mr. Fessel was designated as a Director of Calton by the
holders of a majority in outstanding principal amount of the
Subordinated Notes pursuant to the Plan of Reorganization in May
1993. Since 1985, Mr. Fessel has owned and operated a real
estate company and has acted as principal in numerous commercial
and residential real estate developments throughout the
Northeast. In 1984, Mr. Fessel served as the Vice President of
Acquisitions of the Meredith Organization, a nationally
recognized real estate developer.

Mr. Smith was designated as a Director of Calton by the
holders of a majority in outstanding principal amount of the
Subordinated Notes pursuant to the Plan of Reorganization in May
1993. Since 1990, Mr. Smith has been associated with the M&G
Companies as a Senior Consultant responsible for corporate real
estate consulting activities. From 1977 to 1990, Mr. Smith
served as a Real Estate Consultant and Real Estate Development
Manager for The Spaulding Co., Inc. Mr. Smith also is an adjunct
faculty member at Boston University and a member of the Board of
Trustees of Shelter, Inc.

Provisions Affecting Liability of Officers and Directors

Calton's Amended and Restated Certificate of Incorporation
contains a provision which limits the personal liability of
Calton's officers and directors for monetary damages to Calton
and its shareholders for breaches of any duty owed to Calton or
its shareholders except for those breaches based upon an act or
omission (a) in breach of such person's duty of loyalty to Calton
or its shareholders, (b) not in good faith or involving a knowing
violation of law or (c) resulting in receipt by such person of an
improper personal benefit. This provision absolves Calton's
directors and officers of liability for negligence in the
performance of their duties, including gross negligence involving
business decisions.

Calton's by-laws contain provisions which provide
indemnification rights to officers, directors and employees of
Calton under certain circumstances.

Executive Compensation

The following table sets forth information concerning the
annual and long-term compensation for services in all capacities
to the Company and its subsidiaries for the fiscal years ended
November 30, 1995, 1994 and 1993, of the Chief Executive Officer
of the Company and the other executive officers of the Company who
earned salary and bonuses in fiscal 1995 in excess of $100,000
(collectively, the "Named Officers"):
<TABLE>
<CAPTIONS>

SUMMARY COMPENSATION TABLE

Annual Compensation

Long Term
Compensation
Awards
Securities
Name and Other Annual Underlying All Other
Principal Position (1) Year Salary($)(2) Bonus($)(3) Compensation Options (#) Compensation ($)(4)(5)
<S> <C> <C> <C> <C> <C> <C>
Anthony J. Caldarone 1995 $ 7,692 $ -- $ -- $500,000 (6) $ 240
Chairmanm, Chief Executive 1994 -- -- -- -- --
Officer and President (7) 1993 131,731 -- 20,406 (B) -- 452,201

Douglas T. Noakes 1995 291,000 -- -- 684,564 (9) 587,121 (10)(11)
Former Chief Executive 1994 270,000 170,000 -- 120,000 36,347
Officer and President 1993 245,000 155,000 91,556(12) 564,564 450

Bradley A. Little 1995 137,917 -- -- 185,000 (13) 14,004 (14)
Senior Vice President 1994 126,250 100,000 -- 60,000 11,922
Finance and Tresurer 1993 110,667 70,000 -- 100,000 4,255

Robert A. Fourniadis 1995 120,417 -- -- 185,000 (13) 13,812 (14)
Senior Vice President 1994 108,333 90,000 -- 60,000 11,470
Legal and Secretary 1993 90,667 60,000 -- 100,000 3,706

</TABLE>

(1) Each of the individuals named in the above table served as an officer of
the Company's wholly owned subsidiary, Calton Homes, Inc. ("Calton
Homes"), during all or a portion of the three years ended November 30,
1995. All cash compensation included in the above table was paid or
accrued by Calton Homes.

(2) Includes amounts paid to officers of the Company for services rendered
to Talcon, L.P. in fiscal 1993 as follows: Mr. Little - $17,000; and
Mr. Fourniadis - $4,000. All such amounts were reimbursed to Calton by
Talcon, L.P. through the issuance of Class A Limited Partnership
Interests in Talcon, L.P. See "Talcon, L.P. Transactions."

(3) Represents amounts accrued in fiscal 1994 and fiscal 1993 and payable in
the subsequent fiscal year to the Named Officers pursuant to the
Company's Incentive Compensation Plan (the "Incentive Plan"). No
Incentive Plan Awards were made with respect to fiscal 1995. The
Incentive Plan provides for an incentive compensation pool equal to ten
percent (10%) of the Company's annual pre-tax income, subject to certain
adjustments to pre-tax income that may be made by the Compensation
Committee to remove the effect of events or transactions not in the
ordinary course of the Company's operations. No such adjustments were
made for the fiscal years 1994 or 1993, and the incentive compensation
pools for such years were $656,000 in fiscal 1994 (of which $620,000 was
awarded) and $475,000 in fiscal 1993 (all of which was awarded). Key
operations and senior corporate management employees (the "Eligible
Employees") of the Company and its subsidiaries are eligible for
participation in the Incentive Plan. The Eligible Employees are
determined each fiscal year by the Compensation Committee based on the
recommendations of the President and Chief Executive Officer of the
Company. An Eligible Employee may not receive a distribution from the
incentive compensation pool for any fiscal year that exceeds the lesser
of twenty percent (20%) of the available incentive compensation pool or
one hundred percent (100%) of the Eligible Employee's base salary for
such fiscal year, unless otherwise provided in the Eligible Employee's
employment agreement with the Company. The Compensation Committee
ultimately determines the percentage, if any, of the incentive
compensation pool for a fiscal year to be awarded to an Eligible
Employee.

(4) Includes amounts contributed by the Company under its 401(k) Plan (the
"401(k) Plan"). All full-time employees who have completed more than
one year of service with the Company are eligible to participate in the
401(k) Plan which allows eligible employees to save up to 18% of their
pre-tax compensation (subject to a maximum amount per year established
annually pursuant to the Internal Revenue Code of 1986, as amended)
through a payroll deduction. Subject to the discretion of its Board of
Directors, the Company may make matching contributions to the 401(k)
Plan in the form of cash or Common Stock. The Company's matching
contribution for fiscal 1995 was made primarily in Common Stock and the
Company anticipates that its matching contribution for the next fiscal
year will be made in the form of Common Stock. Amounts contributed by
the Company to the accounts of the Named Officers for fiscal 1995
(including the dollar value of contributions made in the form of Common
Stock) were as follows: Mr. Noakes - $6,930; Mr. Little - $6,930; and
Mr. Fourniadis - $7,100.

(5) Includes the reimbursement by the Company of automobile expenses in
fiscal 1995 as follows: Mr. Caldarone - $240; Mr. Noakes - $5,500; Mr.
Little - $6,000; and Mr. Fourniadis - $6,000.

(6) Represents options to purchase Common Stock which were granted to Mr.
Caldarone effective January 31, 1996 pursuant to his employment
agreement with the Company and subject to the approval of the Equity
Incentive Plan by the shareholders of the Company.

(7) Mr. Caldarone was reappointed Chairman, President and Chief Executive
Officer of the Company on November 21, 1995 having previously served in
such capacities from the Company's inception until June 1993.

(8) Includes the reimbursement by the Company of automobile expenses of
$714. Also includes reimbursement by the Company of medical and dental
expenses paid on behalf of Mr. Caldarone and members of his immediately
family in the aggregate amount of $19,692.

(9) Represents shares of Common Stock underlying options granted in respect
of services rendered in prior fiscal years which were repriced by the
Company during fiscal 1995.

(10) Includes compensation payable pursuant to a severance agreement entered
into by the Company and Mr. Noakes in connection with the
termination of his employment effective November 21, 1995. Such
amount includes (i) a $350,000 severance payment, (ii) $155,140
representing the dollar value of benefits of premiums paid under a
whole life insurance policy (the "Insurance Policy") insuring the
life of Mr. Noakes, (iii) $18,000 of bonus compensation and (iv)
$25,221 payable in respect of accrued and unused vacation pay. As
required under the terms of such agreement, all such amounts were
paid in January 1996. The Company is entitled to recover all premiums
paid in respect of the Insurance Policy from the death benefit or cash
surrender value of the policy. Under the terms of the severance
agreement, the Company is required to pay the cost of
COBRA benefits for Mr. Noakes for a period of 18 months following the
termination of his employment.

(11) Includes $26,330 which represents the dollar value of benefits of
premiums paid (other than in connection with the termination of Mr.
Noakes' employment) under the Insurance Policy purchased by the Company
in accordance with the terms of Mr. Noakes' employment agreement.

(12) Includes $85,556 paid by the Company to Mr. Noakes for relocation
expenses incurred in fiscal 1993.

(13) Represents 25,000 shares underlying options granted in January 1996 for
services rendered in fiscal 1995 and 160,000 shares underlying options
granted in respect of prior fiscal years which were repriced in 1995.

(14) Includes cost of premiums paid by the Company under a program which
provides officers of the Company with additional life insurance
(supplementing the coverage available under the Company's group life
insurance plan) as follows: Mr. Little - $1,074; and Mr. Fourniadis -
$712.

Directors' Compensation

Members of the Board of Directors who are not full time
employees of Calton were each entitled in fiscal 1995 to annual
compensation of $20,000 for service as a director. Calton paid
or accrued a total of $142,000 in director fees to members of the
Board of Directors during fiscal year 1995. Directors are
reimbursed for travel expenses incurred in connection with
attendance at Board and committee meetings. Directors who are
not full time employees are paid a participation fee of $1,000
for each committee meeting attended. If the proposal to adopt
the Equity Incentive Plan is approved by the Company's
shareholders, each non-employee director who has attended 75% or
more of the Board meetings and meetings of the committees on
which he serves during the prior year will be awarded options to
purchase 10,000 shares of the Company's Common Stock each time
such director is re-elected to the Board of Directors.

Employment Agreement with Chief Executive Officer.

Effective November 21, 1995, the Company entered into an
Employment Agreement (the "Employment Agreement") with Anthony J.
Caldarone, Chairman, President and Chief Executive Officer of the
Company. The term of the Employment Agreement will end on
November 30, 1998; provided, that such term will be automatically
extended annually for periods of one (1) year unless a notice of
non-extension is issued by the Company or Mr. Caldarone.
Pursuant to the Employment Agreement, Mr. Caldarone will receive
a minimum annual salary of $250,000 ("Base Compensation") which
may be increased by the Board or a committee thereof. Mr.
Caldarone is entitled to participate in any bonus compensation or
benefit plan or arrangement provided by the Company to its
employees or senior level executives, including the Company's
Incentive Plan. Under the Employment Agreement, Mr. Caldarone
may be awarded up to thirty percent (30%) of the Incentive Plan's
designated incentive compensation for any fiscal year and,
subject to such limitation, is entitled to not less than one-half
of the average percentage that all awards to other Eligible
Participants are of the respective Eligible Participants' base
salary for the relevant fiscal year. Mr. Caldarone is entitled
to be reimbursed by the Company for certain automobile expenses.
The Employment Agreement provides for the grant of options to
purchase 500,000 shares of Common Stock to Mr. Caldarone. The
grant of such options, which became effective January 31, 1996,
is subject to the approval of the proposal to adopt the Equity
Incentive Plan by the shareholders of the Company.

If the Employment Agreement is terminated by reason of Mr.
Caldarone's death, the Company is obliged to reimburse Mr.
Caldarone's designated beneficiaries the cost of COBRA benefits,
other than long-term disability coverage, for a period of 18
months following the date of death. If the Employment Agreement
is terminated by reason of Mr. Caldarone's disability, Mr.
Caldarone will be entitled to receive a lump sum cash payment
equal to one years' Base Compensation (the "Severance
Compensation") from the Company as well as the cost of COBRA
benefits, other than long-term disability, for him and his family
for a period of 18 months following the date of termination, and
continue to participate in any group life insurance or
supplemental life insurance program of the Company then in effect
for a period of 18 months following the date of termination
(collectively, the "Severance Benefits"). The Company may
terminate the Employment Agreement for just cause in the event
Mr. Caldarone is convicted of a felony in connection with his
duties as an officer of the Company, if the commission of such
felony resulted in a personal financial benefit to Mr. Caldarone.
Upon termination for just cause by the Company, Mr. Caldarone is
not entitled to receive any Severance Compensation or Severance
Benefits. If the Company terminates the Employment Agreement
without just cause, Mr. Caldarone is entitled to the Severance
Compensation and Severance Benefits. If the Company terminates
the Employment Agreement by issuing a notice of non-extension,
Mr. Caldarone is entitled to receive a lump sum cash payment
equal to one years' Base Compensation as well as the Severance
Benefits. Mr. Caldarone may terminate the Employment Agreement
for just cause and receive Severance Compensation and Severance
Benefits, if (i) the Board fails to re-elect him as each of
Chairman, President and Chief Executive Officer of the Company,
(ii) the Board significantly reduces the nature and scope of his
authorities, powers, duties and functions, (iii) the Company
breaches any material covenant of the Employment Agreement, or
(iv) the Company consents to Mr. Caldarone's retirement. If Mr.
Caldarone terminates the Employment Agreement without just cause
or by issuing a notice of non-extension, he is not entitled to
the Severance Compensation or Severance Benefit. After the date
of termination of Mr. Caldarone' employment for any of the
reasons specified herein and in the Employment Agreement, Mr.
Caldarone will not receive any further salary payments under the
Employment Agreement.

For the term of the Employment Agreement and for a period of
twelve (12) months following termination of Mr. Caldarone'
employment, other than for just cause by the Company or without
just cause by Mr. Caldarone, Mr. Caldarone is restricted from
competing with the Company in certain regions in which the
Company is actively engaged in business.

Severance Policy and Change in Control Arrangements For Senior
Executives

The Company has established a severance compensation policy
for senior level executives who have been employed by the Company
for more than one year (the "Severance Policy"). To become
eligible to participate in the Severance Policy, a senior level
executive must be selected by the Company's Compensation
Committee and approved by the Board of Directors ("Eligible
Participants"). Under the Severance Policy, an Eligible
Participant whose employment is terminated is entitled to receive
one month's base salary for each year employed by the Company,
pro rated for any partial year, but in no event less than six
month's base salary; provided, however, that the Eligible
Participants who were designated to participate in the Severance
Policy in August 1993 (Mr. Little and Mr. Fourniadis) are
entitled to receive twelve month's base salary. In addition, the
Company will pay all amounts required to be paid by the Eligible
Participants to continue insurance coverage under COBRA for a
period of time equal to the number of months on which the
severance compensation is based. The severance compensation for
Eligible Participants who are parties to employment agreements
will be governed by the terms of such agreements. Eligible
Participants who resign voluntarily or who are terminated for
cause (as defined in the Severance Policy) will not be eligible
for severance compensation.

Under the terms of certain agreements approved by the Board
of Directors of the Company in May 1995, each of Douglas T.
Noakes, the former President and Chief Executive Officer of the
Company, Bradley A. Little and Robert A. Fourniadis will be
entitled to be paid the amount, if any, by which $150,000
($200,000 in the case of Mr. Noakes) exceeds the value of the
stock options held by such officer and granted prior to December
31, 1995 in the event of (i) a merger, consolidation,
recapitalization or other reorganization in which Calton is not
the surviving entity or in which the Company is the surviving
entity and which results in the Company's shareholders
immediately prior to the transaction not holding securities
representing 65% or more of the voting power of the Company's
outstanding securities, (ii) a sale of substantially all of the
Company's assets, (iii) a change in control of the Company which
results in a person or group of affiliated persons owning in
excess of 35% of the voting power of the Company's outstanding
voting securities, prior to May 1996 (or such a transaction or
change of control involves a party from whom it received a
written offer or entered into a letter of intent prior to May
1996). Under the terms of these agreements, the amount payable
to the officer will be proportionately adjusted if the officer
exercises any options prior to an event which triggers the
Company's payment obligation.

Option Grants

Shown below is further information with respect to grants of
stock options to the Named Officers by the Company which are
reflected in the Summary Compensation Table set forth under the
caption "Executive Compensation."

Individual Grants
Number of Percent Potential Realizable
Securities of Total Value at Assumed
Under- Options Annual Rates of Stock
lying Granted to Exercise or Price Appreciation for
Options Employees in Base Price Expiration Option Term
Name Granted (#) Fiscal Year ($/Sh) Date(1) 5% ($) 10%($)

<S> <C> <C> <C> <C> <C> <C>
Anthony J. Caldarone 500,000(1) 27.6% $.34375 1/30/2001 $ 27,547 $ 82,641
Douglas T. Noakes 684,564(2) 37.8% .50 11/21/1998 77,065 139,870
Bradley A. Little 25,000(3) 1.4% .3125 1/30/2006 4,913 12,450
100,000(4) 5.5% .50 7/23/2005 24,798 59,859
60,000(5) 3.3% .50 1/25/2005 18,285 46,042
Robert A. Fourniadis 25,000(3) 1.4% .3125 1/30/2006 4,913 12,450
100,000(4) 5.5% .50 7/23/2005 24,798 59,859
60,000(5) 3.3% .50 1/25/2005 18,285 46,042

</TABLE>

(1) Represents shares of Common Stock underlying options granted to Mr.
Caldarone effective January 31, 1996 and subject to the approval of the
shareholders of the Company of the proposal to adopt the Equity Incentive Plan.
If the shareholders of the Company approve the proposal to adopt the Equity
Incentive Plan, options with respect to 320,000 shares will become immediately
exercisable, and options with respect to the remaining 180,000 shares will
become exercisable on January 31, 1997.

(2) Represents shares of Common Stock underlying options which were repriced in
1995. Each of such options is immediately exercisable.

(3) Represents shares of Common Stock underlying options granted in January
1996 for services rendered in fiscal 1995. The options are exercisable
cumulatively in three equal annual installments commencing on the first
anniversary of the date of grant.

(4) Represents shares of Common Stock underlying options which were granted in
July 1993 and repriced in April 1995. The options are exercisable cumulatively
in three equal annual installments commencing on the first anniversary of the
original date of grant.

(5) Represents shares of Common Stock underlying options which were granted in
January 1995 for services rendered in fiscal 1994 and repriced in April 1995.
The options are exercisable cumulatively in three equal annual installments
commencing on the first anniversary of the original date of grant.

Exercises and Fiscal Year-End Values

Shown below is information with respect to unexercised options to
purchase the Company's Common Stock held by the Named Officers at November 30,
1995. On such date, the exercise price of each of such options exceeded the
closing price of the Company's Common Stock on the American Stock Exchange
($.4375 per share).

Number of Securities
Underlying Unexercised
Options Held at FY-End(#)(1)
Exercisable Unexercisable
Anthony J. Caldarone -- --
Douglas T. Noakes 684,564 --
Bradley A. Little 86,667 73,333
Robert A. Fourniadis 86,667 73,333

(1) Does not include options granted to the Named Officers
in January 1996. See the table presented under the
section captioned "Option Grants."

PRINCIPAL AND SELLING SECURITYHOLDERS

The following table sets forth information concerning
beneficial ownership of Calton's Common Stock as of March 1, 1996
by: (i) persons known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock; (ii) each of
the Company's directors; (iii) each of the Named Officers who was
employed by the Company as of March 1, 1996; (iv) the Selling
Securityholders; and (v) all directors and officers of the
Company as a group. Except as set forth in the footnotes to the
table, the shareholders have sole voting and investment power
over such shares.

Beneficial
Ownership of
Common Stock
Beneficial Number After Offering
Ownership of Shares
Common Stock of
Per- Common Per-
cent Stock cent
Name of Number of Being Number of
Beneficial Owner of Shares Class Offered of Shares Class
Anthony J.
Caldarone (1) 6,924,781(2) 26.2% 1,237,626 3,029,155(3) 11.5%(3)
Joyce P.
Caldarone (1) 4,226,781(4) 16.1% 1,237,626 3,029,155(3) 11.5%(3)
Apollo Homes
Partners,
L.P. (5) 2,658,000(6) 10.1% 2,658,000 --(7) --(7)
Frederick J.
Jaindl (8) 1,616,700 6.1% -- 1,616,700 6.1%
Goldman, Sachs
& Co. (9) 1,344,600(10) 5.1% 1,344,600 --(7) --(7)
Robert A.
Fourniadis (11) 105,277 (12) (13) -- 105,227 --(13)
Bradley A.
Little (11) 99,863 (14) (13) -- 99,863 --(13)
J. Ernest
Brophy (11) 13,770 (13) -- 13,770 --(13)
Mark N. Fessel -- -- -- -- --
Frank Cavell
Smith, Jr. -- -- -- -- --
All Directors and
Executive Officers
as a Group (6
persons)(1)(12)(14) 7,143,391 26.8% 1,237,626 3,247,765(3) 12.2%(3)

(1) Mr. Caldarone, Chairman, President and Chief Executive Officer of the
Company, and his wife Joyce P. Caldarone, maintain a mailing address at
c/o Calton, Inc., 500 Craig Road, Manalapan, New Jersey 07726-8790.
(2) Includes an aggregate of 1,395,209 shares held by Joyce P. Caldarone,
Mr. Caldarone's wife, as to which shares he disclaims any beneficial
interest, and 2,658,000 shares held by Apollo Homes Partners, L.P.
("Apollo Homes"), which Mr. Caldarone has the right to vote in the
election of directors pursuant to a proxy granted to him by Apollo
Homes. In addition, under the terms of a stock purchase agreement
between Mr. Caldarone and Apollo Homes, Mr. Caldarone was granted
certain rights of first offer with respect to the shares of Calton
Common Stock owned by Apollo. The agreement also grants Apollo certain
"tag-along rights" to sell shares of Calton Common Stock in the event
of, and along with, certain transfers of Common Stock made by Mr.
and/or Mrs. Caldarone, and contains provisions requiring (a) Apollo,
under certain circumstances, to sell the Common Stock owned by it in the
event that Mr. and Mrs. Caldarone sell all of the securities of the
Company that they own and (b) Mr. and Mrs. Caldarone to offer to
Apollo, under certain circumstances, the opportunity to purchase a
pro rata portion of additional securities acquired by Mr. and/or Mrs.
Caldarone from the Company. The 6,924,781 shares reflected in the
above table do not include 320,000 shares subject to options which
will become immediately exercisable if a proposal to adopt the
Calton, Inc. 1996 Equity Incentive Plan is approved by the shareholders
of the Company at the Company's Annual Meeting of Shareholders
scheduled for April 23, 1996.
(3) Assumes that all shares of Common Stock being offered by Mr. and Mrs.
Caldarone and Apollo Homes are sold.
(4) Includes an aggregate of 2,871,572 shares of Common Stock held by
Anthony J. Caldarone, Mrs. Caldarone's husband, as to which shares she
disclaims any beneficial interest.
(5) The sole general partner of Apollo Homes is AIF II, L.P., a Delaware
limited partnership. The managing general partner of AIF II, L.P. is
Apollo Advisors, L.P. ("Apollo Advisors") whose principal offices are
located at Two Manhattanville Road, Purchase, New York 10577. Apollo
Capital Management, Inc. ("ACM") is the general partner of Apollo
Advisors. Shareholdings information is based upon Apollo Homes'
Schedule 13D, as amended to November 21, 1995.
(6) See note 2 above for a description of certain rights granted by Apollo
Homes to Anthony J. Caldarone with respect to these shares. Prior to
the commencement of the offering of the securities pursuant to this
Registration Statement, the number of shares of Common Stock owned by
Apollo Homes was 5,316,855.
(7) Assumes that all shares of Common Stock being offered by such
shareholder are sold.
(8) Such holder maintains an address at c/o Jaindl Farms, 3150 Coffeetown
Road, Orefield, Pennsylvania 18609. Shareholdings information is based
upon the Schedule 13D of such holder dated July 28, 1995.
(9) The principal offices of such shareholder are located at 85 Broad
Street, New York, New York 10004. Shareholdings information is based
upon the Schedule 13D, as amended to April 28, 1995 of Goldman, Sachs &
Co., the direct owner, and The Goldman Sachs Group, L.P., which
indicates that each of such entities are the beneficial owners of such
shares.
(10) Prior to the commencement of the offering of the securities pursuant to
this Registration Statement, the number of shares of Common Stock owned
by Goldman, Sachs & Co. was 2,082,600 shares.
(11) Such holder is an officer or director of the Company and maintains a
mailing address at c/o Calton, Inc., 500 Craig Road, Manalapan, New
Jersey 07726-8790.
(12) Includes 86,667 shares subject to currently exercisable options granted
under Calton's 1993 Stock Option Plan and 18,610 shares held through
the Company's 401(k) Plan.
(13) Shares beneficially owned do not exceed 1% of the Company's outstanding
Common Stock.
(14) Includes 86,667 shares subject to currently exercisable options granted
under Calton's 1993 Stock Option Plan and 13,196 shares held through
the Company's 401(k) Plan.

Registration Rights Agreement

Prior to the Effective Date of the Plan of Reorganization,
Calton entered into a Registration Rights Agreement with each of
the Selling Securityholders. In accordance with the terms of the
Registration Rights Agreement, Calton filed a registration
statement, of which this Prospectus forms a part (the "Shelf
Registration Statement"), under which the Common Stock held by
the Selling Securityholders was registered. Calton is obliged to
keep the Shelf Registration Statement effective for a period of
three years from its effective date. The filing of the Shelf
Registration Statement under the Securities Act was a condition
to the consummation of the Plan of Reorganization. Pursuant to
the Registration Rights Agreement, this Prospectus will be used
in connection with the resales of the Common Stock.

Upon the request of Selling Securityholders who own not less
than 5% of the outstanding Common Stock of the Company (on a
fully diluted basis) that is subject to the Registration Rights
Agreement, Calton will be obliged to amend the Shelf Registration
Statement to provide for underwritten offerings of Common Stock.

The Registration Rights Agreement also provides the Selling
Securityholders certain "piggyback" registration rights which
will entitle the Selling Securityholders to have all or a portion
of the Common Stock owned by them included in any registered
public offering of Common Stock conducted by the Company.

Calton will be obligated to bear all expenses incurred by it
in connection with any registration effected pursuant to the
Registration Rights Agreement, except underwriting discounts and
commissions applicable to the sale of securities by the Selling
Securityholders. The Registration Rights Agreement contains
provisions requiring, under certain circumstances, Calton to
indemnify the Selling Securityholders against certain liabilities
arising out of or incident to a registration effected pursuant to
the terms of the Registration Rights Agreement.

DESCRIPTION OF CAPITAL STOCK

Common Stock

Calton is authorized to issue 53,700,000 shares of Common
Stock, $.01 par value, of which approximately 26,445,000 shares
were outstanding as of March 1, 1996 (not including 1,270,000
shares of Common Stock issuable upon exercise of options granted
under the Company's Stock Option Plans). Holders of Common Stock
are entitled to one vote for each share on all matters voted upon
by shareholders and have no preemptive or other rights to
subscribe for additional securities of Calton. Each share of
Common Stock has an equal and ratable right to receive dividends
when, as and if declared by the Board of Directors out of assets
legally available therefor. In the event of a liquidation,
dissolution or winding up of Calton, the holders of Common Stock
will be entitled to share equally and ratably in the assets
available for distribution to holders of Common Stock after the
payment of liabilities.

Preferred Stock and Class A Preferred Stock

Calton's Amended and Restated Certificate of Incorporation,
as amended (the "Certificate"), authorizes 2,600,000 shares of
Preferred Stock, $.10 par value (the "Preferred Stock") and
10,000,000 shares of Class A Preferred Stock, par value $.10 per
share (the "Class A Preferred Stock"). The Preferred Stock is
undesignated as to series and no series thereof may be created
without the requisite vote of Calton's shareholders. The
Certificate authorizes the Calton Board of Directors to issue the
Class A Preferred Stock in one or more series with such dividend,
liquidation, conversion, voting, redemption and other rights as
the Board establishes at that time. As a result, the Board of
Directors may issue the Class A Preferred Stock with such rights
as would discourage possible acquirors of Calton from making a
tender offer or other attempt to gain control of Calton. To the
extent that it impedes any such takeover attempts, the Class A
Preferred Stock may serve to perpetuate management.

Certain Anti-takeover Provisions

The New Jersey Business Corporation Act contains certain
provisions that could have the effect of making it more difficult
for a third party to acquire, or discouraging a third party from
attempting to acquire, control of Calton. Such provisions could
limit the price that certain investors might be willing to pay in
the future for shares of Calton's Common Stock and could make it
more difficult for shareholders to effect certain corporate
actions.

Transfer Agent and Registrar

The Transfer Agent and Registrar for Calton's Common Stock
is Midlantic National Bank, Edison, New Jersey.

SHARES ELIGIBLE FOR FUTURE SALE

There are approximately 26,445,000 shares of Common Stock
outstanding as of March 1, 1996, all of which have been
registered under the Act and are tradeable without restriction
(except as to affiliates of Calton) or further registration under
the Securities Act. The Company has registered 5,240,226 shares
held by the Selling Securityholders for public sale by means of
the Shelf Registration Statement (of which this Prospectus forms
a part) filed under the Securities Act which the Company, under
the terms of the Registration Rights Agreement, is obliged to
keep effective until August 1996.

Calton has reserved 1,492,605 shares of Common Stock for
issuance upon the exercise of options granted pursuant to its
1993 Stock Option Plan and has granted options with respect to
1,270,000 of such shares. All of these shares and 800,000 shares
reserved for issuance in connection with the Company's 401(k)
Plan, have been registered pursuant to the Act. In addition, the
Company expects to submit a proposal to its shareholders in April
1996 to adopt the Equity Incentive Plan. It is anticipated that
2,000,000 shares will be reserved for issuance under the Equity
Incentive Plan and that such shares will be registered under the
Securities Act.

PLAN OF DISTRIBUTION

Shares of Common Stock may be offered by the Selling
Securityholders in transactions on AMEX, in negotiated
transactions, or in a combination of such methods of sale, at
fixed prices which may be changed, at the market price prevailing
at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Securityholders may
effect such transactions to or through registered broker-dealers,
and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling
Securityholders and or the purchaser of such securities for whom
such broker-dealers may act as agent or to whom they may sell as
principals, or both. In addition, the Selling Securityholders
may pledge the shares of Common Stock to broker-dealers and such
broker-dealers may resell the shares of Common Stock in privately
negotiated transactions, transactions on AMEX or otherwise. Any
broker-dealers that participate with the Selling Securityholders
in offers and sales of shares covered hereby may be deemed to be
"underwriters" within the meaning of the Securities Act and any
commissions or discounts received by such broker-dealers and any
profit on the sale of the shares by such broker-dealers might be
deemed to be underwriting discounts and commissions under the
Securities Act.

The Company will not receive any proceeds from the sale of
the shares of Common Stock. The Company has agreed to bear all
expenses (except certain legal expenses) in connection with the
registration of Common Stock by the respective Selling
Securityholders and has agreed to indemnify the Selling
Shareholders against certain liabilities, including liabilities
under the Securities Act.

LEGAL MATTERS

Certain legal matters with respect to the Common Stock
offered hereby will be passed upon for Calton by Giordano,
Halleran & Ciesla, a Professional Corporation, Middletown, New
Jersey.

EXPERTS

The consolidated balance sheet as of November 30, 1995 and
1994 and the consolidated statements of income, changes in
shareholders' equity and cash flows for the years ended November
30, 1995 and 1994 and the six month periods ended May 31, 1993
and November 30, 1993, included in this Prospectus have been
included herein in reliance on the report of Coopers and Lybrand
L.L.P. independent accountants, given on the authority of that
firm as experts in accounting and auditing.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Certified Public Accountants F-2

Consolidated Balance Sheet as of November 30, 1995
and 1994 F-3

Consolidated Statement of Income for the Years Ended
November 30, 1995 and 1994, and the Six Month Periods
Ended May 31, 1993 and November 30, 1993 F-4

Consolidated Statement of Cash Flows for the Years
Ended November 30, 1995 and 1994, and the Six Month
Periods Ended May 31, 1993 and November 30, 1993 F-5

Consolidated Statement of Changes in Shareholders'
Equity for the Years Ended November 30, 1995
and 1994, and the Six Month Periods Ended May 31, 1993
and November 30, 1993 F-6

Notes to Year End Consolidated Financial Statements F-7

Report Of Independent Accountants
Board of Directors and Shareholders of Calton, Inc.

We have audited the accompanying consolidated balance sheet of
Calton, Inc. and Subsidiaries as of November 30, 1995 and 1994 and
the related consolidated statements of income, shareholders' equity
and cash flows for the years ended November 30, 1995 and 1994 and
the six month periods ended November 30, 1993 and May 31, 1993.
These 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
consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated
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.
On May 28, 1993, Calton, Inc. reorganized and emerged from
bankruptcy. As discussed in Note 11 to the consolidated financial
statements, the financial statements at May 31, 1993 reflect the
estimated fair market value of assets in accordance with the
American Institute of Certified Public Accountants Statement of
Position 90-7. The consolidated financial statements for the years
ended November 30, 1995 and 1994 and the six month period ended
November 30, 1993 referred to above are presented on the new basis,
and accordingly, are not comparable to May 31, 1993 and prior.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Calton, Inc. and Subsidiaries as of November
30, 1995 and 1994 and the consolidated results of their operations
and their cash flows for the years ended November 30, 1995 and 1994
and six month periods ended November 30, 1993 and May 31, 1993 in
conformity with generally accepted accounting principles.

Coopers & Lybrand LLP
/s/ Coopers & Lybrand

Princeton, New Jersey
January 12, 1996

Consolidated Balance Sheet
November 30, 1995 And 1994

1995 1994
Assets
Cash and cash equivalents . . . . . . . . . . $ 5,161,000 $ 5,759,000
Receivables . . . . . . . . . . . . . . . . . 8,964,000 7,823,000
Inventories . . . . . . . . . . . . . . . . . 64,246,000 88,802,000
Commercial land and buildings . . . . . . . . 9,439,000 16,597,000
Investments in joint ventures . . . . . . . . 850,000 850,000
Prepaid expenses and other assets . . . . . . 2,756,000 2,313,000
Total assets . . . . . . . . . . . . . . . . $ 91,416,000 $122,144,000

Liabilities and Shareholders' Equity
Revolving credit agreement. . . . . . . . . . $45,000,000 $ 60,000,000
Mortgages payable . . . . . . . . . . . . . . 1,227,000 9,398,000
Accounts payable. . . . . . . . . . . . . . . 3,270,000 6,968,000
Accrued expenses and other liabilities. . . . 14,906,000 16,733,000
Total liabilities. . . . . . . . . . . . . . 64,403,000 93,099,000

Commitments and contingent liabilities

Shareholders' Equity
Common stock, $.01 par value, 53,700,000
shares authorized; issued and outstanding
26,371,000 in 1995 and 25,997,000 in 1994. . 264,000 260,000
Paid in capital . . . . . . . . . . . . . . . 22,822,000 21,720,000
Retained earnings . . . . . . . . . . . . . . 3,927,000 7,065,000
Total shareholders' equity . . . . . . . . . 27,013,000 29,045,000

Total liabilities and shareholders' equity . $ 91,416,000 $122,144,000

See accompanying notes to consolidated financial statements.

[CAPTION]
Consolidated Statement Of Income
<TABLE>

Six Month Six Month
Period Ended Period Ended
Years Ended November 30, November 30, May 31,
1995 1994 1993 1993
<S> <C> <C> <C> <C>
Revenues. . . . . . . . . . . . . . . . $ 180,843,000 $ 168,723,000 $ 83,351,000 $ 76,555,000
Equity in operations
of joint ventures. . . . . . . . . . . -- -- -- (9,422,000)
180,843,000 168,723,000 83,351,000 67,133,000
Costs and expenses
Cost of revenues. . . . . . . . . . . 159,690,000 139,339,000 67,473,000 68,304,000
Selling, general and administrative . 18,845,000 20,183,000 10,100,000 10,785,000
Provision for estimated
net realizable value . . . . . . . . 1,593,000 400,000 -- 3,384,000
Restructuring charges . . . . . . . . 1,940,000 -- -- --
Amortization of values in excess of
amounts allocable to identifiable
net assets . . . . . . . . . . . . . -- 206,000 218,000 253,000
182,068,000 160,128,000 77,791,000 82,726,000

Income (loss) from operations . . . . . (1,225,000) 8,595,000 5,560,000 (15,593,000)

Other charges (credits)
Interest expense, net . . . . . . . . 1,847,000 1,235,000 879,000 3,338,000
Other (income) expense. . . . . . . . (765,000) -- (75,000) 70,000
Reorganization charges. . . . . . . . -- -- -- 37,493,000
Write-off of financing costs. . . . . -- 800,000 -- --
Income (loss) before income taxes
and extraordinary gain. . . . . . . . (2,307,000) 6,560,000 4,756,000 (56,494,000)
Provision in lieu of income taxes . . . 831,000 2,367,000 1,884,000 --
Income (loss) before
extraordinary gain. . . . . . . . . . (3,138,000) 4,193,000 2,872,000 (56,494,000)

Extraordinary gain. . . . . . . . . . . -- -- -- 58,311,000
Net income (loss) . . . . . . . . . . . $ (3,138,000) $ 4,193,000 $ 2,872,000 $ 1,817,000

Income (loss) per share
Income (loss) before
extraordinary gain. . . . . . . . . . $ (.12) $ .16 $ .11 $ (1.67)
Extraordinary gain . . . . . . . . . . -- -- -- 1.72
Net income (loss) . . . . . . . . . . $ (.12) $ .16 $ .11 $ .05

</TABLE>
See accompanying notes to consolidated financial statements.
[CAPTION]
Consolidated Statement Of Cash Flows
<TABLE>

Six Month Six Month
Period Ended Period Ended
Years Ended November 30, November 30, May 31,
1995 1994 1993 1993
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities
Net (loss) income. . . . . . . . . . . $ (3,138,000) $ 4,193,000 $ 2,872,000 $ 1,817,000
Adjustments to reconcile net (loss)
income to net cash provided (used)
by operating activities
Restructuring charges . . . . . . . 1,940,000 -- -- --
Depreciation and amortization. . . . 1,741,000 1,877,000 1,151,000 1,327,000
Provision for estimated net
realizable value. . . . . . . . . . 1,593,000 400,000 -- 3,384,000
Option abandonments. . . . . . . . . 1,050,000 -- -- --
Provision in lieu of income taxes. . 831,000 2,928,000 1,649,000 --
Issuance of stock under 401(k) Plan. 213,000 198,000 -- --
Reserve reversal . . . . . . . . . . (1,113,000) -- -- --
Extraordinary gain . . . . . . . . . -- -- -- (58,311,000)
Equity in operations of
joint ventures. . . . . . . . . . . -- -- -- 9,422,000
Reorganization charges . . . . . . . -- -- -- 35,765,000
(Increase) decrease in receivables . (1,141,000) (1,460,000) 6,744,000 146,000
Decrease (increase) in inventories . 26,897,000 (11,345,000) (5,530,000) 11,318,000
(Decrease) increase in accounts
payable, accrued expenses and other
liabilities . . . . . . . . . . . . (5,508,000) (1,138,000) (1,834,000) 1,945,000
(Increase) decrease in prepaid
expenses and other assets . . . . . (792,000) 633,000 616,000 11,281,000
22,573,000 (3,714,000) 5,668,000 18,094,000
Cash Flows from Financing Activities
Repayment under revolving credit
agreement. . . . . . . . . . . . . . (19,500,000) (9,500,000) (13,479,000) (8,473,000)
Proceeds under revolving credit
agreement. . . . . . . . . . . . . . 4,500,000 14,500,000 7,500,000 --
Repayment of mortgages payable. . . . (8,171,000) (882,000) (471,000) (2,571,000)
Repurchase of Senior Subordinated
Notes. . . . . . . . . . . . . . . . -- -- (1,000,000) (5,000,000)
(23,171,000) 4,118,000 (7,450,000) (16,044,000)
Net (decrease) increase in cash and
cash equivalents. . . . . . . . . . . (598,000) 404,000 (1,782,000) 2,050,000
Cash and cash equivalents at
beginning of period . . . . . . . . . 5,759,000 5,355,000 7,137,000 5,087,000
Cash and cash equivalents at end
of period . . . . . . . . . . . . . . $ 5,161,000 $ 5,759,000 $ 5,355,000 $ 7,137,000

See accompanying notes to consolidated financial statements.
</TABLE>
[CAPTION]
Consolidated Statement Of Shareholders' Equity
<TABLE>

Class B Retained
Common Common Preferred Paid In Earnings
Stock Stock Stock Capital (Deficit)
<S> <C> <C> <C> <C> <C>
Balance, November 30, 1992. . . . $ 321,000 $ 76,000 $ -- $43,431,000 $(28,113,000)
Net income for the six month
period ended May 31, 1993. . . . -- -- -- -- 1,817,000
Elimination of accumulated
deficit in connection with the
reorganization . . . . . . . . . -- -- -- -- 26,296,000
Retirement of stock in connection
with the plan of reorganization. (321,000) (76,000) -- (22,925,000) --
Issuance of common and. . . . . . 234,000 -- 260,000 -- --
Balance, May 31, 1993 . . . . . . 234,000 -- 260,000 20,506,000 --
Net income for the six month
period ended November 30, 1993 . -- -- -- -- 2,872,000
Amortization of deferred
compensation related to stock
option plan. . . . . . . . . . . -- -- -- 21,000 --
Balance, November 30, 1993. . . . 234,000 -- 260,000 20,527,000 2,872,000
Net income. . . . . . . . . . . . -- -- -- -- 4,193,000
Conversion of preferred stock . . 26,000 -- (260,000) 234,000 --
Issuance of stock under
401(k) Plan. . . . . . . . . . . -- -- -- 198,000 --
Tax adjustment. . . . . . . . . . -- -- -- 719,000 --
Amortization of deferred
compensation related to stock
option plan. . . . . . . . . . . -- -- -- 42,000 --
Balance, November 30, 1994. . . . 260,000 -- -- 21,720,000 7,065,000
Net loss. . . . . . . . . . . . . -- -- -- -- (3,138,000)
Issuance of stock under
401(k) Plan. . . . . . . . . . . 4,000 -- -- 209,000 --
Provision in lieu of income taxes -- -- -- 831,000 --
Amortization of deferred
compensation related to stock
option plan. . . . . . . . . . -- -- -- 62,000 --
Balance, November 30, 1995. . . $ 264,000 $ -- $ -- $22,822,000 $ 3,927,000
</TABLE>
See accompanying notes to consolidated financial statements.

Notes To Consolidated Financial Statements

1. Summary Of Significant Accounting Policies

Principles of consolidation

The consolidated financial statements include the accounts of Calton, Inc.
and all of its wholly-owned and majority-owned subsidiaries (the "Company").
All significant intercompany accounts and transactions have been eliminated.
The Company accounts for its investments in its 50% or less interests in
corporate and unincorporated joint ventures by the equity method.
The accompanying financial statements for the years ended November 30,
1995 and 1994 and the six months ended November 30, 1993 are separated by a
black line from prior periods due to the adoption of fresh-start accounting and
reporting to reflect the effects of the Reorganization as of May 31, 1993, and
are not comparable to the amounts reflected for prior periods (see Note 11).
Certain reclassifications have been made to prior years' financial statements
in order to conform with the 1995 presentation.

Income recognition

Revenue and cost of revenue on sales of homes are recognized when
individual homes are completed, and title and other attributes of ownership
have been transferred by means of a closing to the buyer. Revenue and cost of
revenue on land sales are recognized when all conditions precedent to closing
have been fulfilled, a specified minimum down payment has been received and
there is reasonable assurance that resulting receivables will be collected.

Cash and cash equivalents

Cash equivalents consist of short-term, highly liquid investments, with
original maturities of three months or less, that are readily convertible into
cash.

Inventories

Inventories are stated at the lower of cost or estimated net realizable
value for each property. As of November 30, 1995, certain inventories had been
restated to reflect estimated net realizable value. Estimated net realizable
value has been determined based upon the amount the Company expects to realize
through sale or development based on management's present plans for each
property. In a buildout of a community, certain assumptions are made concerning
future sales prices and absorption of sales and closings in the community's
life span. There is an inherent risk that those assumptions made may not occur.
The estimated net realizable value of a property may exceed the value which
could be obtained through the immediate sale of the property if development
plans for such property support a higher cost recovery. Cost includes direct
and allocated indirect costs. Land and land development costs generally include
interest and property taxes incurred. Interest is capitalized using interest
rates on specifically related debt and the Company's average borrowing rate.
Inventoried costs are charged to cost of revenues based upon the estimated
average cost within each community.

Commercial land and buildings

Commercial land and buildings, stated at estimated fair market value,
include certain assumptions in their ultimate disposition such as future cash
flow, the ability of the Company to obtain certain zoning changes and
regulatory or governmental approvals. There is an inherent risk that those
assumptions made may not be realized.

Income taxes

Deferred income taxes are determined on the liability method in accordance
with Statement of Financial Accounting Standards No. 109 (see Note 8).

Prepaid expenses and other assets

Prepaid expenses and other assets consist primarily of property and
equipment, prepaid architect fees and prepaid insurance. Prepaid architect fees
are amortized on a per unit basis as homes are delivered.

Risks and uncertainties

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses for the periods
reported. Actual results could differ from those estimates.
The Company, as well as the homebuilding industry in general, is very
sensitive to economic conditions. Inflation, interest rate fluctuations,
available capital and consumer confidence impact the ability of the Company
to market, sell and build homes.

Per share computations

Per share computations are based upon the weighted average number of
shares of common stock and preferred stock outstanding during each period
presented (26,281,000 and 26,095,000 for the years ended November 30, 1995 and
1994, respectively, and 26,239,000 for the six months ended November 30, 1993.
Prior to the Company's Reorganization in 1993, the weighted average number of
shares of Common Stock and Class B Common Stock was 33,819,000 for the six
months ended May 31, 1993).

2. Receivables

Receivables consist of the following (amounts in thousands):

November 30,
1995 1994
Closing proceeds due . . . . . . . . . . . . . $ 4,946 $ 2,830
Due from municipalities. . . . . . . . . . . . 2,573 3,192
Mortgages and notes receivable, net. . . . . . 557 524
Other. . . . . . . . . . . . . . . . . . . . . 888 1,277
$ 8,964 $ 7,823

3. Inventories

The components of inventories are as follows (amounts in thousands):

November 30,
1995 1994
Land and land development costs. . . . . . . . $ 37,144 $ 59,555
Direct and indirect construction costs . . . . 22,603 24,955
Land purchase options and cost of
projects in planning. . . . . . . . . . . . . 4,499 4,292
$ 64,246 $ 88,802

The total amount of interest costs capitalized was $5,016,000 for the year
ended November 30, 1995, $4,005,000 for the year ended November 30, 1994,
$1,467,000 for the six month period ended November 30, 1993 and $1,130,000 for
the six month period ended May 31, 1993.
In the year ended November 30, 1995, the Company recorded provisions of
$1,593,000 to state inventory, consisting primarily of two properties, to
estimated net realizable value. For the year ended November 30, 1994, $400,000
was recorded as a provision for estimated net realizable value. In the six
month period ended May 31, 1993, the Company recorded provisions of $2,200,000
to state inventory at estimated net realizable value. These charges are
reflected in the provision for estimated net realizable value. There were no
charges recorded in the six month period ended November 30, 1993. During 1995,
the Company acquired $10,511,000 of land. During 1994, the Company acquired
$25,700,000 of land, $2,486,000 of which was financed with a purchase money
mortgage.

4. Commercial land and buildings

During the year ended November 30, 1995, the Company sold approximately
$7,000,000 of its commercial building property and reduced related mortgage
payables by $6,900,000, in accordance with management's plan to focus on its
core business of residential homebuilding. As a result, Commercial land and
buildings was reduced from $16,597,000 at November 30, 1994, to $9,439,000 at
November 30, 1995.
The sales were consummated in April 1995 and July 1995 for proceeds of
$880,000 and $7,200,000, respectively. The sales resulted in pre-tax gains of
approximately $80,000 and $425,000, respectively, and provided approximately
$850,000 of cash for operations after the retirement of the mortgage debt.
The remaining properties consists primarily of land located in
Pennsylvania, New Jersey and Florida. These properties are available for sale
as a result of management's focus on residential homebuilding.
In the last month of 1994, the Company sold a commercial building for
$800,000 in cash which reduced Commercial land and buildings by $770,000. The
net proceeds of approximately $750,000 were used to reduce mortgages payable.
The sale of this building did not result in a significant gain or loss.

5. Revolving Credit Agreement

In February 1995, the Company entered into an agreement with its Lenders
extending the term of the existing Amended Credit Agreement (the "Facility")
from its maturity date of June 1, 1995 to February 28, 1997. In
February 1996, the Company amended its Facility to meet anticipated operating
results through the remainder of the term of the Facility. In conjunction with
the Company's decision to exit from the Chicago market, the amended Facility
will permit borrowings of up to $55,000,000 until November 1, 1996, when the
commitment is reduced to $50,000,000. The amended Facility increased the
interest rate charged to the Company to the lender's prime rate (8.75% at
November 30, 1995) plus two percent (2%). The Company believes that funds
generated by its operating activities and borrowing availability under the
Facility will provide sufficient capital to support the Company's operations
through the term of the Facility; however, the Company believes that it will
have to seek an extension of the Facility or arrange replacement financing
prior to the expiration of the Facility on February 28, 1997.
The February 1996 amendment to the Facility changed various covenants, the
most restrictive of which prescribe levels of tangible net worth (as defined),
EBITDA, and cash basis interest expense coverage and limits the acquisition of
land and land development expenditures and the incurrence of other
indebtedness. Although these limitations will restrict the Company's ability to
expand its business, the Company believes it will be able to comply with the
amended financial covenants based on its business plan. There can be no
assurance that, if market conditions deteriorate further, business plan levels
will be met.
The Facility also limits the aggregate amount of cash and letters of
credit which can be used to collateralize performance bonds to $5,000,000 of
cash (approximately $2,600,000 and $3,200,000 was outstanding as of November
30, 1995 and November 30, 1994, respectively) and up to $10,000,000 of letters
of credit ($1,500,000 and $3,000,000 were outstanding as of November 30, 1995
and November 30, 1994, respectively). At November 30, 1995, approximately
$46,500,000, including $1,500,000 of letters of credit, was outstanding under
the Facility. The Facility includes a borrowing base, based upon a percentage
of the Company's eligible inventory, which restricted borrowings to $50,000,000
at November 30, 1995. The unused Facility commitment of $8,500,000 is available
as of November 30, 1995 to the Company for investment in inventory that results
in the corresponding growth of its borrowing base. As of November 30, 1995,
approximately $3,500,000 was available to be borrowed under the borrowing base
restriction. Substantially all of the Company's assets are pledged as
collateral under the Facility. The number of lenders under the Facility has
recently decreased to four participants with Foothill Capital acquiring
thirty-seven and one-half percent (37.5%) of the Facility from the Apollo Group
and Fidelity Investments.
Amounts borrowed under the Facility during the year ended November 30,
1995, bore interest at the lenders prime rate (8.75% at November 30, 1995) plus
one and one-half percent (1-1/2%). The weighted average interest rates for the
years ended November 30, 1995 and 1994 were 11.1% and 8.1%, respectively. The
weighted average amounts borrowed for the corresponding years were $58,105,000
and $56,704,000, respectively.
The total amount of interest paid, net of amounts capitalized, in the
years ended November 30, 1995 and 1994 was $2,124,000 and $1,440,000,
respectively; $893,000 for the six months ended November 30, 1993; and
$1,445,000 for the six months ended May 31, 1993.

6. Mortgages Payable

Mortgages payable consist of the following (amounts in thousands):

November 30,
Interest Rate 1995 1994
Mortgages payable, land (a). . . . Prime $ 1,227 $ 2,486
Mortgages payable, other (b) . . . Prime + 1% -- 6,912
$ 1,227 $ 9,398

(a) Approximately $1,885,000 of inventories are pledged as collateral
for a purchase money mortgage to a land seller at November 30, 1995 compared to
$3,400,000 at November 30, 1994. During 1995, the purchase money mortgage was
reduced by payments in exchange for mortgage releases. The remaining mortgage
payable is due in 1996. The interest rate is prime (8.75% at November 30, 1995)
but is not to exceed 10% and interest is paid semi-annually in March and
September.
(b) Mortgages of $6,912,000 at November 30, 1994 were paid from the proceeds
from the sale of the commercial properties in April and July 1995 (see Note 4).

The weighted average interest rate for mortgages payable during the year
ended November 30, 1995 was 9.9%.

7. Shareholders' Equity

Pursuant to the Plan of Reorganization on May 28, 1993, the Company's
Restated Certificate of Incorporation was amended to (i) eliminate the
Company's Class B Stock, (ii) provide for 53,700,000 authorized shares of
Common Stock (par value $.01 per share) and (iii) 2,600,000 shares of
Redeemable Convertible Preferred Stock (par value $.10 per share). In 1994, the
Amended and Restated Certificate of Incorporation was amended to also provide
10,000,000 shares of Class A Preferred Stock (par value $.10 per share) none of
which is issued or outstanding.
The Company adopted the Calton, Inc. 1993 Non-Qualified Stock Option Plan
(the "Plan") which became effective upon the consummation of the Reorganization
under which a total of 1,493,000 shares of Common Stock were reserved for
issuance. Under the terms of the Plan, options may be granted at an exercise
price designated by the Compensation Committee. The term of the option is for a
maximum term of ten years. As of November 30, 1995, 1,270,000 options had been
granted, none of which had been exercised and 1,046,000 were exercisable.
During the second quarter of fiscal 1995, the Company's Board of Directors
reviewed the outstanding options granted under the Company's Plan. The Board
considered that the outstanding options were granted in more favorable economic
periods. Therefore, in order to continue to provide an incentive to management,
the Board adjusted the exercise price of all outstanding options held by
employees to $.50 per share, the fair market value of the Company's Common
Stock at the date of the Board action. The market value of the Company's stock
at November 30, 1995 was $.4375.
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock Based Compensation". Effective December 1, 1995,
the Company will adopt the disclosure only alternative.

8. Income Taxes

The following schedule reconciles the federal provision in lieu of income
taxes computed at the statutory rate to the actual provision in lieu of income
taxes (amounts in thousands):

Six Six
Month Month
Period Period
Years Ended Ended Ended
November 30, November May 31,
1995 1994 30, 1993 1993
Computed (benefit)/provision in lieu
of income taxes at 34% . . . . . . . . $ (784) $ 2,231 $ 1,617 $ 618
Expenses for which deferred tax
benefit cannot be
currently recognized. . . . . . . . . 1,258 409 -- 18,722
State and local tax provision/(benefit). 352 346 267 (3,737)
State tax reserves . . . . . . . . . . . -- (695) -- --
Nondeductible acquisition
costs and expenses. . . . . . . . . . -- -- -- 4,223
Gain on extinguishment of debt . . . . . -- -- -- (19,826)
Other, net . . . . . . . . . . . . . . . 5 76 -- --
Total provision in lieu
of income taxes . . . . . . . . . . . $ 831 $ 2,367 $ 1,884 $ --

The components of the provision in lieu of income taxes are as follows
(amounts in thousands):

Six Six
Month Month
Period Period
Years Ended Ended Ended
November 30, November May 31,
1995 1994 30, 1993 1993
Federal
Current . . . . . . . . . . . . . . . $ -- $ -- $ -- $ --
Deferred. . . . . . . . . . . . . . . -- -- -- --
Provision in lieu of income taxes . . 479 2,537 1,479 --
State
Current . . . . . . . . . . . . . . . 79 24 235 --
Deferred. . . . . . . . . . . . . . . -- -- -- --
Provision/(benefit) in lieu of
income taxes. . . . . . . . . . . . 273 (194) 170 --
$ 831 $ 2,367 $ 1,884 $ --

Fresh-start accounting and reporting requires the Company to report a
provision in lieu of income taxes when the Company recognizes a
pre-reorganization deferred tax asset. This requirement applies despite the
fact that the Company's pre-reorganization net operating loss carryforward and
other deferred tax assets would eliminate the related federal income tax
payable. The current and future year tax benefit related to the
pre-reorganization net deferred tax asset was recorded as a reduction of values
in excess of amounts allocable to identifiable net assets until exhausted and
then as a direct increase to paid in capital. The net deferred tax asset of
$18,647,000 is primarily attributable to pre-reorganization deductible
temporary differences.
Temporary differences and carryforwards which give rise to a significant
portion of deferred tax assets and liabilities at November 30, 1995 and 1994
are as follows (amounts in thousands):

November 30, 1995 November 30, 1994
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
Fresh-start inventory reserves . . . . .$ 1,114 $ -- $ 2,636 $ --
Income from joint ventures . . . . . . . 328 417 5,344 2,040
Inventory and other reserves . . . . . . 2,064 -- 5,542 --
Preproduction interest . . . . . . . . . -- 536 -- 536
Federal net operating losses . . . . . . 7,568 -- 14,110 --
State net operating losses . . . . . . . 6,647 -- 8,483 --
Condemnation . . . . . . . . . . . . . . -- -- -- 245
Depreciation . . . . . . . . . . . . . . 285 89 306 7
Deferred state taxes . . . . . . . . . . 1,691 -- 3,938 957
Other. . . . . . . . . . . . . . . . . . 812 820 1,209 891
20,509 1,862 41,568 4,676
Valuation allowance. . . . . . . . . . .(18,647) -- (36,892) --
Total deferred taxes . . . . . . . . . .$ 1,862 $ 1,862 $ 4,676 $ 4,676

Deferred income taxes arise from temporary differences between the tax
basis of assets and liabilities and their reported amounts in the financial
statements. For federal and state tax purposes, a valuation allowance was
provided on the deferred tax assets due to uncertainty of realization. Federal
tax effects of deferred tax assets were recognized to the extent of existing
available deferred tax credits.
The federal net operating loss carryforward for tax purposes is
approximately $22,000,000 at November 30, 1995 and $43,000,000 at November 30,
1994. The decrease is related to the reduction due to the Section 382
limitation and the utilization against taxable income attributable to Talcon
L.P. A preliminary estimate of the Company's ability to use its deferred tax
assets to offset future income is approximately $1,700,000 per year under
Section 382 of the Internal Revenue Code as a result of the recent change in
control of the Company. These federal carryforwards will expire between 2007
and 2009. The Company received an income tax refund of $50,000 in 1995. No such
amounts were received in 1994 and 1993.

9. Commitments and Contingent Liabilities

(a) In July 1994, an action was filed against Calton Homes, Inc., the
Township of Plainsboro, New Jersey and its planning board, certain real estate
brokers and certain unnamed officers of Calton Homes, Inc., by approximately 60
purchasers in the Company's Princeton Manor development seeking compensatory
and punitive damages arising out of an alleged failure to disclose that a
portion of the property adjacent to the community could be developed by
Plainsboro Township as a public works site. The Company is vigorously
contesting this matter and, although there can be no assurances, does not
believe that the case will have any material effect on the financial condition
or results of operations of the Company. In addition, the Company believes that
it is contractually entitled to indemnification from Plainsboro Township in the
event that any liability should arise.
(b) The Company is involved from time to time in other litigation in the
ordinary course of business. Management presently believes that the resolution
of any such matter should not have a material, adverse effect on the financial
condition or results of operations of the Company.
(c) The Company is obligated under operating leases for office space
expiring between 1996 and 2000 with total annual rentals of approximately
$313,000. Rental expense for the year ended November 30, 1995, November 30,
1994, and the six and twelve month periods ended November 30, 1993 amounted to
$781,000, $715,000, $408,000 and $846,000, respectively.
(d) The Company has a qualified contributory retirement plan (401(k)
Plan) which covers all eligible full-time employees with a minimum of one year
of service. Employees may contribute up to eighteen percent (18%) of their
annual compensation with employer matching at the Company's discretion. The
Company's contribution to the plan was $213,000 in 1995 and $198,000 in 1994.
The Company's contribution to the plan was not significant in 1993. The
Company's matching contribution, in the form of registered Common Stock of the
Company, for 1995 was 75% of participant contributions. The Company's matching
contribution, in the form of registered Common Stock of the Company, for 1996
will be 5% of participant contributions.
(e) Commitments include the usual obligations of housing producers for the
completion of contracts in the ordinary course of business.

10. Investments In Joint Ventures

Investments in joint ventures at November 30, 1995 consist of a
partnership interest in a joint venture located in Maryland.
The Company previously wrote off its entire equity investment in Talcon
L.P. and recorded a reserve for $1,000,000 of indebtedness owed to it by
Talcon L.P. In connection with Talcon L.P.'s dissolution and liquidation,
it paid the Company $890,000 in the 1995 in full satisfaction of its debt
obligations. This payment was classified as non-operating Other (income)
expense.
Equity in operations of joint ventures was a loss of $9,422,000 for the
six months ended May 31, 1993. No such amounts were recorded for the years
ended November 30, 1995 and 1994 and the six month period ended November 30,
1993.

11. Reorganization

Calton, Inc. and certain of its subsidiaries consummated a Plan of
Reorganization on May 28, 1993 (the "Effective Date"). The Plan of
Reorganization (the "Reorganization"), which was confirmed by the United States
Bankruptcy Court on May 6, 1993, resulted in the discharge of approximately
$61,542,000 of principal and $22,847,000 of interest due the holders of the
16-5/8% Senior and 12-5/8% Subordinated Notes of Calton, Inc. and certain of
its subsidiaries in exchange for 21,709,000 shares of Common Stock, 2,600,000
Warrants to purchase Common Stock, 2,600,000 shares of Preferred Stock,
$5,000,000 of cash and $1,000,000 of the short term new notes (retired on
September 30, 1993) which were issued to the 16- 5/8% Noteholders. During the
second quarter of fiscal 1994, 2,072,185 Warrants were exercised and, as
required under the terms of the Reorganization, the Company used the proceeds
to redeem 2,072,185 shares of Redeemable Convertible Preferred Stock at a
redemption price of $1.53 per share. The remaining 527,815 shares of Redeemable
Convertible Preferred Stock were automatically converted into Common Stock. The
value of the cash, notes and securities issued was less than the debt
discharged, thereby resulting in an extraordinary gain of $58,311,000.
In accounting for the effects of the Reorganization, the Company
implemented Statement of Position 90-7 ("SOP 90-7"), "Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code" issued by the American
Institute of Certified Public Accountants in November 1990. SOP 90-7 requires
an allocation of the reorganization value in conformity with the procedures
specified by Accounting Principles Board Opinion No. 16, "Business
Combinations" for transactions reported on the basis of the purchase method.
The Company's reorganization value was determined to be $21,000,000 with
the assistance of independent advisors. The reorganization value was based upon
discounted projected cash flows for the reorganized Company over a five-year
period. The projected cash flows included assumptions as to anticipated sales
and margins, marketing plans and operating expense levels. A discount rate of
16% was used, which reflected the weighted average cost of capital, the
uncertainty of the cash flows, the general inherent risk of the housing
industry and general business conditions. In this regard, the Company
incurred $23,917,000 in charges to adjust its inventories and commercial land
and buildings to estimated fair market value. Such estimates and assumptions
were inherently subject to significant economic and competitive uncertainties
beyond the control of the Company, including, but not limited to, those
with respect to the future courses of the Company's business activity.
Accordingly, there will usually be differences between projections and actual
results because events and circumstances frequently do not occur as expected,
and those differences may be material.
As a result of the determination of the amount of reorganization value and
the fair market value of assets and liabilities (other than intangibles), a
$11,360,000 write-off of Values in excess of amounts allocable to identifiable
net assets ("goodwill") was recorded and a $5,000,000 balance resulted. The
resulting goodwill was amortized and was reduced by the realization of deferred
tax assets through the recognition of the provision in lieu of income taxes. As
a result of these two factors, the amount of goodwill was reduced to zero as
of November 30, 1994.

12. Quarterly Financial Results(Unaudited)

Quarterly financial results for the years ended November 30, 1995 and 1994
are as follows (amounts in thousands, except per share amounts):

Three Months Ended
February 28, May 31, August 31, November 30,
1995 1995 1995 1995
Revenues . . . . . . . . . . $38,215 $38,836 $60,362 $43,430
Gross profit . . . . . . . . 4,411 4,403(b) 7,418 4,921
Net income (loss). . . . . . (375)(a) (316) 1,008 (3,455)(c)
Net income (loss) per share. (.01) (.01) .04 (.13)

Three Months Ended
February 28, May 31, August 31, November 30,
1994 1994 1994 1994
Revenues . . . . . . . . . . $28,994 $36,252 $47,129 $56,348
Gross profit . . . . . . . . 5,558 6,441 8,280 9,105
Net income . . . . . . . . . 746 705 1,355 1,387(d)
Net income per share . . . . .03 .03 .05 .05

(a)Includes a $200,000 charge for costs primarily associated with the
consolidation of the New Jersey-North and New Jersey-South divisions.

(b)Includes a $1.1 million charge resulting from abandoning nine
properties under option and a credit of $1.1 million realized from the reversal
of a reserve previously provided on a completed community.

(c)Includes $1.6 million writedown of inventories to estimated net
realizable value, $1.1 million of restructuring charges related to the wind
down of the Chicago division and $640,000 in executive severance, partially
offset by the $820,000 collection of a note previously reserved.

(d)Includes costs of $800,000 relating to the proposed unit offering and
related working capital facility and a tax benefit of approximately $700,000
related to the resolution of a certain tax issue.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

SEC registration fee ...................... $ 5,049
NASD filing fee ........................... 1,903
Accounting fees and expenses .............. 40,000
Legal fees and expenses ................... 80,000
Printing and engraving .................... 37,000
Blue Sky fees and expenses ................ 2,500
Fees and Expenses of Transfer
Agent and Registrar ...................... 1,000
Miscellaneous ............................. 3,000
Total ..................................... $169,452

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

Item 14. Indemnification of Directors and Officers.

Section 14A:3-5 of the New Jersey Business Corporation Act grants
corporations the power to indemnify their directors, officers, employees and
agents in accordance with the provisions therein set forth.

Article VI of the By-laws of Calton, Inc. ("Calton") provides for the
indemnification of the directors, officers, employees and agents of Calton and
any persons serving at Calton's request as a director, officer, employee or
agent of a subsidiary of Calton ("Corporate Agents"). More specifically,
Calton is obliged to indemnify a Corporate Agent against his expenses and
liabilities actually and reasonably incurred in connection with the defense of
any proceeding involving the Corporate Agent by reason of his being or having
been such a Corporate Agent, other than a proceeding by or in the right of
Calton; provided, that such Corporate Agent acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of Calton
and, with respect to any criminal proceeding, such Corporate Agent had no
reasonable cause to believe his conduct unlawful. In addition, Calton shall
indemnify a Corporate Agent against his liabilities and expenses, actually or
reasonably incurred by him in connection with the defense, in any proceeding,
by or in the right of Calton to procure a judgment in its favor which involves
the Corporate Agent by reason of his being or having acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests
of Calton or a court determines that the Corporate Agent is entitled to
indemnity. To the extent that a Corporate Agent of Calton has been successful
on the merits in any proceeding referred to above, Calton must indemnify the
Corporate Agent against expenses, including attorney fees.

Unless otherwise ordered by a court, prior to the payment of any
indemnification to a Corporate Agent of Calton, the Board of Directors of
Calton or the shareholders thereof will determine in a given situation whether
indemnification is proper under Calton's By-laws based upon the conduct of the
Corporate Agent. Expenses incurred by a Corporate Agent in connection with a
proceeding may be paid by Calton in advance of the final disposition of the
proceeding; provided, that such payment is authorized by Calton's Board of
Directors and the Corporate Agent undertakes to repay such amount if it is
found that he is not entitled to be indemnified under Calton's By-laws.

Article VI of Calton's By-laws empowers Calton to purchase and maintain
insurance on behalf of any Corporate Agent against any expenses incurred in any
proceeding and any liabilities asserted against him by reason of his being or
having been a Corporate Agent, whether or not Calton would have the power to
indemnify him against such expenses and liabilities under Calton's By-laws.

See Article VI of Calton's By-laws, as amended, filed as Exhibit 3.2 to
Calton's Annual Report on Form 10-K for the fiscal year ended November 30,
1990, for a complete description of indemnification by Calton of its directors
and officers.

Calton maintains a liability insurance policy providing coverage for its
directors and officers and the directors and officers of its subsidiaries in an
amount up to an aggregate limit of $15,000,000 for any single occurrence.

Item 15. Recent Sales of Unregistered Securities.

The Company has not sold any securities within the past three years which
were not registered under the Securities Act of 1933.

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibit Index.

Exhibit No. Exhibit

x 2. Plan of Reorganization of Calton, Inc. and Subsidiaries.

x 3(a) Amended and Restated Certificate of Incorporation of Calton, Inc.
filed with the Secretary of State, State of New Jersey on May 28,
1993.

v 3(b) Certificate of Amendment to Amended and Restated Certificate of
Incorporation of Calton, Inc. filed with the Secretary of State,
State of New Jersey on April 27, 1994.

# 3.15 By-laws of Calton, Inc., as amended.

x 5. Opinion of Giordano, Halleran & Ciesla, a Professional
Corporation, including consent of such counsel.

z 10. Calton, Inc. Amended and Restated 1993 Non-Qualified Stock Option
Plan.

x 10.1 Registration Rights Agreement dated as of May 28, 1993, between
Calton, Inc. and the Selling Securityholders.

+ 10.2 Severance Policy for Senior Executives of Registrant.

o 10.3(a) Executive Employment Agreement dated as of January 26, 1994
between Calton, Inc. and Douglas T. Noakes.

z 10.3(b) Amendment to Executive Employment Agreement between the Company
and Douglas T. Noakes.

+ 10.4 Incentive Compensation Plan of Registrant.

x 10.5 Amended and Restated Loan and Security Agreement dated as of May
28, 1993 among Calton, Inc., Calton Funding, Inc. and a group of
financial institutions (the "Amended Credit Agreement").

o 10.6(a)
First, Second and Third Amendments to the Amended Credit
Agreement.

@ 10.6(b) Fourth Amendment to Amended Credit Agreement.

+ 10.6(c) Fifth Amendment to Amended Credit Agreement.

z 10.6(d) Sixth Amendment and Seventh Amendment to Amended Credit
Agreement.

z 10.7 Supplemental Executive Compensation Agreement between Registrant
and Douglas T. Noakes.

z 10.8 Supplemental Executive Compensation Agreement between Registrant
and Bradley A. Little. An agreement substantially identical in
term and content between the Registrant and Robert A. Fourniadis
has not been reproduced herein.

10.9 Executive Employment Agreement dated as of November 21, 1996
between Registrant and Anthony J. Caldarone.

z 21. Subsidiaries of Calton, Inc.

* 23. Consent of Independent Accountants.

x 23.1 Consent of Giordano, Halleran & Ciesla, P.C. (filed with exhibit
5).

x 24. Power of Attorney (included on signature pages of Post-Effective
Amendment No. 3 to Registration Statement on Form S-1).

z 27. Financial Data Schedules.

x Filed with Amendment No. 1 to the Registration Statement.

* Filed with Post-Effective Amendment No. 3 to the Registration
Statement.

v Incorporated by reference to Amendment No. 1 to the Calton, Inc.
Registration Statement on Form S-1 (Registration No. 33-76312)
pursuant to Rule 411(c) promulgated under the Securities Act of
1933.

@ Incorporated by reference to Amendment No. 2 to the Calton, Inc.
Registration Statement on Form S-1 (Registration No. 33-76312)
pursuant to Rule 411(c) promulgated under the Securities Act of
1933.

# Incorporated by reference to the Calton, Inc. Annual Report on
Form 10-K for the fiscal year ended November 30, 1990, pursuant
to Rule 411(c) promulgated under the Securities Act of 1933.

o Incorporated by reference to the Calton, Inc. Annual Report on
Form 10-K for the fiscal year ended November 30, 1993, pursuant
to Rule 411(c) promulgated under the Securities Act of 1933.

+ Incorporated by reference to Calton, Inc. Annual Report on Form
10-K for the fiscal year ended November 30, 1994 pursuant to Rule
411(c) promulgated under the Securities Act of 1933.

z Incorporated by reference to the Calton, Inc. Annual Report on
Form 10-K for the fiscal year ended November 30, 1995, pursuant
to Rule 411(c) promulgated under the Securities Act of 1933.

(b) Financial Statement Schedules.

Schedule II - Calton, Inc. and Subsidiaries, Valuation and Qualifying
Accounts at May 31, 1993 and November 30, 1993 1994 and 1995

All other Schedules are omitted because they are not applicable or the
required information is shown in the Financial Statements or notes thereto.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

Our reported on the consolidated financial statements of Calton, Inc., dated
January 12, 1996, which includes an explanatory paragraph regarding the
financial statements at May 31, 1993 being reflected at estimated fair market
value in accordance with the American Institute of Certified Public Accountants
Statement of Position 90-7 and the financial statements for the six months
ended November 30, 1993 are not comparable to May 31, 1993 and prior thereto,
has been included in this Form S-1 on page F-2. In connection with our audits
of such financial statements, we have also audited the related financial
statement schedules listed in the Index on page II-5 of this Form S-1.

In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.

COOPERS & LYBRAND LLP
/s/ Coopers & Lybrand LLP

Princeton, New Jersey
January 12, 1996

SCHEDULE II
CALTON, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS

(Amounts in Thousands)

Additions
Balance at Charged to Charged to Balance
Beginning Costs and Other At End
Description of Period Expenses Accounts Deductions of Period

Six month period
ended May 31, 1993:
Net realizable
value reserves for
inventory: $12,884 $ 2,200 $23,517(A) $38,601(B) $ ---
Valuation allowance
for net deferred
tax asset $21,798 $18,722(C) $ --- $ --- $40,520

Six month period
ended November 30,
1993:
Net realizable
value reserves for
inventory: $ --- $ --- $ --- $ --- $ ---
Valuation allowance
for net deferred
tax asset $40,520 $ --- $ 1,451 $ 2,606 $39,365

Year ended
November 30, 1994:
Net realizable
value reserves for
inventory: $ --- $ 400 $ --- $ --- $ 400
Valuation allowance
for net deferred
tax asset $39,365 $ --- $ --- $ 2,473 $36,892

Year ended
November 30, 1995:
Net realizable
value reserves for
inventory: $ 400 $ 1,593 $ --- $ --- $ 1,993
Valuation allowance
for net deferred
tax asset $36,892 $ --- $ --- $18,245(D) $18,647

(A) Represents $23,517,000 of fresh-start reserves charged to
Reorganization Costs.

(B) Represents the revaluation of inventory to reflect estimated
fair market value in accordance with the American Institute of
Certified Public Accountants Statement of Position 90-7.

(D) Represents the impact of the recalculation of the Section
382 limitation and the utilization against taxable income
attributable to Talcon, L.P.

Item 17. Undertakings.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by section 10(a)(3) of
the Act;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth
in the Registration Statement;

(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;

(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the Registration Statement to include any
financial statements required by Rule 3-19 of Regulation S-X at the start
of any delayed offering or throughout a continuous offering.

SIGNATURES

Pursuant to the requirements of the Securities Act of
1933, the Registrant has duly caused this Post-Effective Amendment No. 3
to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Township of Manalapan,
State of New Jersey, on this 20th day of March, 1996.

CALTON, INC.
(Registrant)

By: /s/ Anthony J. Caldarone
Anthony J. Caldarone, Chairman,
President and Chief Executive
Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Anthony J. Caldarone, his true and
lawful attorney-in-fact and agent for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registrant Statement, and to
file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agents full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as
they might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 3 to the Registration Statement has been
signed below by the following persons in the capacities and on the date
indicated.

Signature Title Date

/s/ Anthony J. Caldarone President, Chief Executive
(Anthony J. Caldarone) Officer and Director
(Principal Executive Officer) March 20, 1996

/s/ Bradley A. Little Senior Vice President - Finance
(Bradley A. Little) & Treasurer
(Principal Financial and
Accounting Officer) March 20, 1996

/s/ Mark N. Fessel Director March 20, 1996
(Mark N. Fessel)

/s/ Frank Cavell Smith, Jr. Director March 20, 1996
(Frank Cavell Smith, Jr.)

/s/ J. Ernest Brophy Director March 20, 1996
(J. Ernest Brophy)

EXHIBITS
TO
POST-EFFECTIVE
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT

CALTON, INC.
EXHIBIT 23

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1 (File
No. 33-60022) of our report, dated January 12, 1996 on our audits of the
consolidated financial statements schedule of Calton, Inc. We also consent
to the reference to our firm under the caption "Experts" and in "Selected
Historical Consolidated Financial Information".

Coopers & Lybrand LLP
/s/ Coopers & Lybrand LLP

Princeton, New Jersey
March 21, 1996