Legend Properties Inc – ‘10-K’ for 12/31/99

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Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         55    284K 
 2: EX-21.1     Subsidiaries of the Registrant                         2±     7K 
 3: EX-27.1     Financial Data Schedule                                1      7K 

10-K   —   Annual Report
Document Table of Contents

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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 Form 10-K

[X]             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF                
 THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31, 1999

OR

[ ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF              
 THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___.

 Commission File Number 1-9885

 Legend Properties, Inc.
(Exact name of Registrant as specified in its charter)

 Delaware                                             36-3465359
(State or other jurisdiction of                               (IRS Employer     
incorporation or organization)                              Identification No.) 

3755 7th Terrace, Suite 301, Vero Beach, Florida                  32960         
(Address of principal executive offices)                       (Zip Code)     

Registrant's telephone number, including area code           (561) 778-0180     

                                                       Name of each exchange
Title of each Class                                       on which registered   

Shares of Common Stock                                           None           
Securities registered pursuant to Section 12(g) of the Act:                     

None
(Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was     
required to file such reports), and (2) has been subject to such filing         
requirements for the past 90 days. YES X    NO                                  

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

Shares of common stock outstanding as of March 31, 2000: 6,290,874. The         
Registrants shares are not listed on an exchange or included in the NASDAQ      
quotation system. There is no established public trading market for the shares  
and the volume of trades in the secondary market does not permit the            
determination of the aggregate market value of the Registrants shares of common 
stock held by non-affiliates.                                                   

 DOCUMENTS INCORPORATED BY REFERENCE

See Exhibit index located on page 28

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 TABLE OF CONTENTS

PART 1

                                                                [Download Table]


                                                                            
ITEM 1. DESCRIPTION OF BUSINESS                                            1

ITEM 2. PROPERTIES                                                         6

ITEM 3. LEGAL PROCEEDINGS                                                  6

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                7

                                     PART II                                

ITEM 5. MARKET FOR THE REGISTRANT'S SHARES AND RELATED                      
        SHAREHOLDER MATTERS                                                8

ITEM 6. SELECTED FINANCIAL DATA                                            9

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                   
        CONDITION AND RESULTS OF OPERATIONS                               10

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK        21

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA          21

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON                    
        ACCOUNTING AND FINANCIAL DISCLOSURE                               21

                                    PART III                                

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT               22

ITEM 11. EXECUTIVE COMPENSATION                                           23

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND                
         MANAGEMENT                                                       25

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                   26

                                     PART IV                                

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS               
         ON FORM 8-K                                                      28

                                   SIGNATURES                               

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PART I

ITEM 1.DESCRIPTION OF BUSINESS                                                  

BUSINESS OPERATIONS                                                             

The Registrant, Legend Properties, Inc., formerly known as Banyan Mortgage      
Investment Fund (the Company or Legend), is the surviving corporation from the  
December 31, 1996 merger (the Merger) of Banyan Mortgage Investment Fund        
(Banyan) and RGI U.S. Holdings, Inc. (RGI/US). The Company is organized as a    
corporation under the laws of the State of Delaware, pursuant to a Restated     
Certificate of Incorporation filed December 31, 1996.                           

As of December 31, 1999, Holdings owns approximately 80% of the outstanding     
common shares of the Company. On October 15, 1999 the Company received a        
proposal from Holdings for the merger of the Company with a wholly-owned        
subsidiary of Holdings. The Company's Board of Directors established a special  
committee to evaluate and consider the proposal. On January 6, 2000 the Board of
Directors approved a merger and the Company and Holdings executed a Merger      
Agreement where Holdings will acquire all of the outstanding shares, not        
currently held by Holdings, for $0.50 per share in cash. The merger is subject  
to, among other things, approval by the shareholders and compliance with all    
applicable regulatory and governmental requirements.                            

The Company was originally established to invest primarily in (i) short-term    
loans, junior mortgage loans, wraparound mortgage loans and first mortgage loans
on income-producing properties and (ii) construction loans, pre-development     
loans and land loans. In response to defaults on loans made by the Company to   
its borrowers, in February 1990, the Company suspended making new loans, except 
for advances of additional funds under circumstances which it deemed necessary  
to preserve the value of existing collateral, including instances where the     
Company foreclosed upon or taken title, directly or indirectly to the           
collateral. At the time of the Merger, the Company controlled the ownership of a
2,227-acre parcel located in Charles County, Maryland (Chapman's Landing), a    
2,685-acre development located in Prince William County, Virginia (Southbridge) 
and a 565-acre parcel located in Monterey County, California (Laguna Seca       
Ranch). The Laguna Seca Ranch and Chapman's Landing projects were sold in       
December 1997 and October 1998, respectively.                                   

RGI/US was a Washington corporation and until the Merger, was a wholly-owned    
subsidiary of RGI Holdings, Inc. (Holdings) which is an indirect majority-owned 
subsidiary of Aker RGI ASA, a Norwegian investment company with interests in    
cement and building materials, oil and gas technology, seafoods and other       
industries. At the time of the Merger, RGI/US, through various subsidiaries,    
owned, developed and operated the following real estate: (i) Grand Harbor, a    
772-acre residential golf community located in Vero Beach, Florida; (ii) Oak    
Harbor, a 116-acre retirement community also located in Vero Beach, Florida     
which includes the Royal Palm Convalescent Center, a skilled nursing care       
facility licensed for 72 beds and (iii) a 164,724 square foot shopping center   
located in Lynnwood, Washington (the Lynnwood Center). The Lynnwood Center was  
sold in November 1997.                                                          

The Company's strategy is to realize and enhance the market potential of its    
remaining assets. The Company currently controls approximately 2,700 acres of   
land in a master planned community (Southbridge), a residential golf community  
(Grand Harbor) and a retirement community (Oak Harbor). During September 1999,  
the Company sold the Ashburn Corporate Center (Ashburn), a commercial business  
park development. The Company had acquired the front parcel of the project      
earlier in the year.                                                            

Legend is a diversified real estate development and operating company engaged in
three primary business activities: real estate development and sales, club      
operations and patient services. The Company operates other ancillary operations
that provide support services to its primary business activities but these      
ancillary operations are not material enough to be considered a primary business
activity.                                                                       

Real Estate Development and Sales                             

The Real Estate Development and Sales activity is responsible for land planning,
entitlements, land development, construction, and the sale of land parcels and  
finished homes.                                                                 

Southbridge includes a mix of commercial and residential land uses including    
single-family, townhouse and apartment/condominium units and office, retail and 
industrial/flex space. The Company is attempting to enhance the value of this   
project through land use, entitlement and zoning modifications and selective    
development. Such activities take into account local zoning, political and      
market conditions. The Company anticipates primarily                            

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developing commercial sites and residential housing lots for sale to third      
parties but also pursues opportunities to sell undeveloped parcels or enter into
joint ventures, or whole or partial bulk sales.                                 

Grand Harbor and Oak Harbor include primarily finished lots upon which the      
Company, through a general contractor, builds a variety of housing types and    
styles including villas, cottages, duplex and condominiums for sale to third    
parties. The Company also pursues outright lot sales.                           

Club Operations                                               

The Club Operations activity is responsible for the management and operations of
the club facilities.                                                            

Grand Harbor operates the Grand Harbor Golf and Beach Club which includes a     
clubhouse, two 18-hole golf courses, swimming and tennis facilities, and an     
ocean front beach club.                                                         

Oak Harbor operates the Oak Harbor Club which includes a clubhouse and a 9-hole 
golf course.                                                                    

Patient Services                                              

The Patient Services activity is responsible for the management and operations  
of the assisted living and skilled care nursing facilities.                     

Oak Harbor operates Somerset House (assisted living facility) and Royal Palm    
Convalescent Center (skilled care nursing facility).                            

Following is a narrative describing Legend's core assets. The project business  
plans explained below are subject to numerous risks and uncertainties which are 
more fully described in Item 7 "Management's Discussion and Analysis of         
Financial Condition and Results of Operations - Factors Affecting Legend's      
Business Plan." If the Company is unable to secure the necessary financing or   
capital to meet its future needs, the project business plans will likely be     
materially revised, which may have a material adverse effect on the Company's   
financial condition and results of operations. (See Item 7 "Management's        
Discussion and Analysis of Financial Condition and Results of Operations -      
Liquidity and Capital Resources.")                                              

DESCRIPTION OF PROJECTS                                                         

Grand Harbor. Grand Harbor is a 772-acre gated residential golf community,      
located along the Indian River in Vero Beach, Florida, with two 18-hole         
championship golf courses and waterfront access with a marina containing 144    
slips available for lease. The residences at Grand Harbor are clustered in      
individual islands affording a view of the surrounding golf courses and scenic  
waterways. Development of Grand Harbor began in 1987 and continued until 1990   
when the Resolution Trust Corporation acquired the property and most development
and construction activities were terminated. In 1991, affiliates of RGI/US      
acquired the project, completed the development of the marina and constructed   
the clubhouse facilities and continued the residential development. At December 
31, 1999 the Company owned approximately 300 acres.                             

Grand Harbor offers two 18-hole championship golf courses: a Harbor Course      
designed by Pete Dye and a River Course designed by Joe Lee. The 28,000 square  
foot clubhouse, which serves both courses, also serves as a social center for   
Grand Harbor residents. Grand Harbor maintains 24-hour access control, together 
with a variety of amenities, including an on-site swimming facility and eight   
clay tennis courts and an off-site oceanfront beach club. Grand Harbor and Oak  
Harbor collectively received zoning entitlements for the development of a       
maximum of 2,688 residential units. The Company's business plan, however,       
contemplates the development of 1,196 residential units at Grand Harbor and 322 
residential units at Oak Harbor (see below). The Company believes this plan best
maximizes the value of these parcels based on existing and anticipated market   
conditions, even though these parcels are zoned for greater density. If market  
conditions change, the Company can increase, to a certain extent, the proportion
of multi-family homes to be developed under existing zoning.                    

Grand Harbor currently offers single-family detached homes, duplexes and        
low-rise condominiums with sales prices ranging from approximately $200,000 to  
$1,100,000 with sizes ranging from 1,600 to over 5,000 square feet. Previously, 
golf course and riverfront lots were available at sales prices ranging from     
$165,000 to over $500,000. Through December 31, 1999, 746 residences had been   
sold and an additional 33 contracted for sale for delivery in                   

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early or mid 2000. Based on the current development plan, approximately 417     
additional residences are planned for Grand Harbor. Grand Harbor has received   
governmental approvals for approximately 725,000 square feet of commercial space
on 60 acres. In early 1998, a 20-acre parcel was sold for a luxury apartment    
project.                                                                        

Grand Harbor currently derives revenue from the construction and sale of        
single-family detached homes, duplexes, condominiums and individual lots; the   
operation of club facilities; the rental of marina docks and the operation of a 
harbor facility. In conjunction with offering residential units for sale, Grand 
Harbor offers four (4) types of equity memberships in the Grand Harbor Golf and 
Beach Club: (i) full memberships for $40,000; (ii) golf and tennis memberships  
for $20,000; (iii) tennis memberships for $10,000; and (iv) social memberships  
for $7,500. Upon the completion of sale of the equity memberships, Grand Harbor 
will turn over management and control of the Grand Harbor Golf and Beach Club to
its members.                                                                    

There are several residential communities located within Vero Beach that compete
with Grand Harbor in terms of location, quality, and/or price, including but not
limited to Windsor, Orchid Island Golf & Beach Club, and Indian River Club.     
While these communities offer many of the same amenities as Grand Harbor such as
an oceanfront beach club and a gated community, many do not offer boating       
access, a completed golf clubhouse, or have a limited product choice.           

Oak Harbor. Oak Harbor is a 116-acre luxury country club retirement community,  
located along the Indian River in Vero Beach, Florida. On-site amenities include
the 36,000 square foot clubhouse, a 24,900 square foot assisted living facility 
with 24 private suites and a nine-hole golf course designed by Joe Lee. The     
clubhouse contains a community hall, arts and crafts room, hobby shop, game     
room, library and fitness center. Oak Harbor provides the opportunity to own a  
home within a community that offers on-site health care and a Club that offers a
wide range of daily services designed to make life easier for residents. Oak    
Harbor Club members receive daily meals, transportation, housekeeping, social   
activities and access to optional health care. A discussion of Oak Harbor's     
zoning entitlements is included under "Grand Harbor". At December 31, 1999 the  
Company owned approximately 100 acres.                                          

Oak Harbor offers condominiums and single-family homes ranging in price from    
$250,000 to $635,000 and ranging in size from 1,178 to 2,850 square feet. All   
residences have emergency call systems and trained health professionals are     
available 24 hours a day to handle emergencies. Three levels of health care,    
including skilled nursing, assisted living and home health care, are options    
available to Oak Harbor residents at an additional cost above the monthly Club  
dues described below.                                                           

-        Oak Harbor Club                                                        

    Membership in the Oak Harbor Club requires an initial $25,000 club
        deposit. Upon the re-sale of an Oak Harbor residence, the $25,000 club
       deposit is refundable subject to the new owner becoming a Club member
       and paying the deposit. In addition, there is an initiation fee equal
       to ten percent (10%) of the purchase price of the residence. This fee
        may be deferred until the residence is resold, but will then equal 10%
       of the greater of the initial purchase price or the sale price of the
        residence. (Currently, this initiation fee is waived for the first 125
        Club members.) The Oak Harbor Club is a non-equity club and Oak Harbor
         will not turn over management and control to its members. Monthly dues,
         ranging from $1,800 for a single person to $2,320 for a couple, include
       among other things, one meal per day, local transportation around Oak
    Harbor and Vero Beach, weekly housekeeping and linen service, Club
       activities, green fees on Oak Harbor's private nine-hole golf course,
and 24-hour emergency response service.                       

-        Royal Palm Convalescent Center                                         

       The off-site Royal Palm Convalescent Center is a skilled care nursing
     facility licensed for 72 beds, which is currently configured for 50
 beds in private and semi-private rooms. Royal Palm is a private
       facility, which does not accept Medicaid or Medicare patients and has
   received a Superior Rating the past 16 consecutive years from the
Florida Department of Health and Rehabilitative Services.     

      Daily rates range from approximately $159 for a semi-private room to
 $219 for a private suite. As of December 31, 1999, 37 beds were
occupied (74%).                                               

-        Somerset House                                                         

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 The on-site Somerset House is one of the finest assisted living
        facilities in the United States. Initially constructed with 24 private
    suites with patios situated in private courtyards, the facility is
designed as a "mini-clubhouse" versus the institutional style 
        facilities prevalent in many communities. The facility's design allows
     expansion to up to 64 suites. The main building includes the common
   living, dining and kitchen facilities as well as the examination,
      consultation and home health care offices. The 24 private suites are
        located in a separate wing behind the main building. Each suite is 406
   square feet and contains living, dining and kitchen facilities. A
        centrally located nurse's station is staffed 24 hours a day by nursing
staff to provide assistance as needed.                        

    Daily rates range from $84 for Oak Harbor Club members to $135 for
   non-members. As of December 31, 1999 there were 8 suites occupied
(33%).                                                        

Oak Harbor's current development plan is for a total of 322 residences          
consisting of villas, cottages and condominium units. As of December 31, 1999,  
93 residences have been sold and an additional 14 residences were under contract
for sale for delivery in early or mid 2000. Residential sales are subject to a  
non-refundable deposit of 20% of the sales price but are typically subject to   
cancellation by the purchaser under specified circumstances, such as the        
purchaser becoming incapable of independent living, or death. Although Oak      
Harbor is a retirement community, all residents must be capable of independent  
living at the time they join the Oak Harbor Club.                               

There are two competing lifecare communities located within a 35-mile radius of 
Oak Harbor. Indian River Estates, located in Vero Beach, and Sandhill Cove,     
located 32 miles south in Stuart, Florida. Both target a lower demographic      
prospect than Oak Harbor, have smaller average units than those offered by Oak  
Harbor, and do not offer home ownership to their residents.                     

Southbridge. Southbridge is a 2,685 acre mixed use master planned community     
located along the Potomac River in Prince William County, Virginia,             
approximately 24 miles south of Washington, D.C. Southbridge is located within  
close proximity to the major employment centers of Washington, D.C. The current 
development plan is for approximately 5,400 single-family detached homes,       
townhomes, garden apartments and condominiums as well as 4 million square feet  
of commercial space including office, flex-tech and retail. The project is      
anticipated to be built in phases over the next 15 - 20 years and will offer    
residents an assortment of amenities including a public 18 hole championship    
golf course, three clubhouse facilities with pools and tennis courts and a town 
center overlooking the Potomac River. At December 31, 1999 the Company owned    
approximately 2,300 acres.                                                      

Southbridge is divided into seven phases; only the first of which has had sales 
to date. Phase I is zoned for 2,376 residential units and 280,000 square feet of
commercial space. Although approved for 2,376 residential units, the Company's  
current development plan anticipates development of 1,822 units, which the      
Company believes maximizes the underlying value of the property based on        
existing and anticipated market conditions. The Company can modify its          
development plans within the limitations of the existing zoning in response to  
changes in market conditions.                                                   

Southbridge offers builders different residential lot products as follows:      

                                                                [Download Table]


STYLE                              LOT SIZE 
-----                            -----------
                                            
Garden Apartments                        N/A
Condominiums                             N/A
Townhomes                                N/A
Carriage                            5,000 SF
Cottage                             6,000 SF
Village                             8,000 SF
Country                            10,000 SF
Estate                             20,000 SF

As of December 31, 1999, 792 residential lots have been sold and an additional  
436 lots were under contract with 5 homebuilders for deliveries over the next   
several years. Of the 436 lots under contract, 70 single-family lots are        
developed and ready for delivery and 166 single-family lots are currently under 
development. Anticipated quarterly deliveries range from 22 to 30 lots. The     
Company continues to negotiate with other builders for additional residential   
lots sales contracts. Future engineering and development of residential lots    
will be timed to satisfy contractual requirements and anticipated market        
demands.                                                                        

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In November 1998, the Company formed Potomac Heritage Homes to construct and    
sell single family homes at various price points within Southbridge. Potomac    
Heritage's function is to compliment residential lot sale efforts. In early     
2000, the Company ceased the operations of Potomac Heritage Homes and has one   
completed home available for sale.                                              

The housing industry in the Greater Washington D.C. region is highly            
competitive. In the Company's local Washington D.C. market, there are numerous  
land developers, homebuilders and private interests with which the company      
competes to attract homebuilders and qualified buyers. The Company competes     
primarily on the basis of price, location, product and the level of amenities   
provided within the community.                                                  

OPERATING SEGMENTS                                                              

See the Notes to Consolidated Financial Statements.                             

OTHER INFORMATION                                                               

Development and construction activities performed in the State of Florida are   
not seasonal, however development and construction activities performed in the  
State of Virginia are affected by inclement weather, with the majority of the   
development and construction work occurring between the months of March and     
November. As it relates to sales activities, the majority of revenues recorded  
related to sales in the State of Florida occur between the months of October and
May, while revenues related to sales occurring in the State of Virginia are     
recorded more evenly throughout the year.                                       

As of December 31, 1999, the Company had 350 employees including two executive  
officers.                                                                       

The Company reviews and monitors compliance with federal, state and local       
provisions which have been enacted or adopted regulating the discharge of       
material into the environment, or otherwise relating to the protection of the   
environment. For the year ended December 31, 1999, the Company did not incur a  
material amount for capital expenditures for environmental matters nor does it  
anticipate making any material expenditures for environmental matters for the   
year ending December 31, 2000.                                                  

Certain statements in this Annual Report that are not historical fact constitute
"forward-looking statements" within the meaning of the Private Securities       
Litigation Reform Act of 1995. Discussions containing forward-looking statements
may be found in this section and in the sections headed "Legal Proceedings,"    
"Market for the Registrant's Shares and Related Shareholder Matters" and        
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations." Without limiting the foregoing, words such as "anticipates,"       
"expects," "intends," "plans" and similar expressions are intended to identify  
forward-looking statements. These statements are subject to a number of risks   
and uncertainties (See Item 7 "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Factors Affecting Legends Business Plan.")
Actual results could differ materially from those projected in the              
forward-looking statements. The Company undertakes no obligation to update these
forward-looking statements to reflect future events or circumstances.           

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ITEM 2.  PROPERTIES                                                             

As of December 31, 1999, the Company owned interests in three properties. Below 
is a brief description of property interests owned by the Company:              

                                                        [Enlarge/Download Table]


        Name, Location and             Approx.           Date                                                
         Type of Property                Size          Acquired                    Description               
-----------------------------------  -------------  ---------------  ----------------------------------------
                                                                                                             
Grand Harbor                          300 acres        6/91(1)       a 100% interest in a corporation        
Vero Beach, FL                                                       which owns the subject property         
Residential Development and Club                                                                             
Facilities                                                                                                   

Oak Harbor                            100 acres        6/91(1)       a 100% interest in a corporation        
Vero Beach, FL                                                       which owns the subject property         
Residential Development, Club and                                                                            
Patient Services Facilities                                                                                  

Southbridge                          2,300 acres         5/91        a 100% interest in general partnerships 
Prince William County, VA                                            which own the subject property          
Land Development                                                                                             

(1) The acquisition date represents the date the property was acquired by RGI/US
or affiliates. RGI/US merged with and into the Company effective December 31,   
1996.                                                                           

ITEM 3.  LEGAL PROCEEDINGS                                                      

Ashburn Corporate Center                                                        

During August 1998, Legend filed a lawsuit and a memorandum of Lis Pendens in   
the Circuit Court of Loudoun County against Atlantic Research Corporation (ARC) 
which was amended during November 1998. Legend was seeking specific performance 
under a real estate sales contract to purchase approximately 28 acres in Loudoun
County, Virginia (the Front Parcel) and any other relief the court would grant. 
During the first quarter of 1999, Legend and ARC reached an agreement concerning
the real estate sales contract that resulted in Legend's acquisition of the     
Front Parcel (see Note 4 of the Notes to Consolidated Financial Statements). As 
a result, the litigation was withdrawn and dismissed in the second quarter of   
1999.                                                                           

Laguna Seca Ranch                                                               

On December 14, 1998, a Legend subsidiary, BMIF Monterey County Corp., filed a  
complaint against New Cities Development Group, Bates Properties, Inc., New     
Cities Development Company, Deregt Development, Inc., Rancho Monterey, L.L.C.   
(collectively New Cities), Old Republic Title Company and David Bohen           
(collectively Old Republic) in the United States District Court, Northern       
District of California, San Jose Division.                                      

During 1997, Legend sold a property known as the Laguna Seca Ranch to New Cities
with Legend retaining a house with certain surrounding property known as Lot 40 
together with certain access easements to the nearest public right-of-way. New  
Cities agreed, as part of the sale, to establish a separate legal parcel for Lot
40 subsequent to the sale. As part of the sale, Legend agreed to cooperate and  
share equally in certain costs with New Cities in negotiating an agreement      
concerning water service to the property with California-American Water Company 
(Cal-Am). Pursuant to this, Legend agreed to post $200,000 in an interest       
bearing escrow account held by Old Republic to pay any necessary amounts due    
from Legend in consummating an agreement with Cal-Am. An agreement was reached  
with Cal-Am on March 20, 1998 to provide the water needs, and Legend agreed with
New Cities to contribute $60,000 out of the escrow to defray certain costs. On  
August 28, 1998 Cal-Am withdrew from its commitment. Subsequently, Old Republic 
released the $200,000 escrow with interest to New Cities.                       

Legend claimed that New Cities breached certain implied covenants in refusing to
negotiate and consummate the agreement with Cal-Am, that New Cities failed to   
establish Lot 40 as a separate parcel, and that Old Republic wrongly released   
the funds in escrow to New Cities. Legend was seeking to recover $140,000 plus  
interest on the escrow, that                                                    

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New Cities convey Lot 40, that New Cities pay approximately $75,000 of costs    
incurred by Legend for negotiating the agreement with Cal-Am and other damages. 

During the first quarter of 2000, Legend and the defendants reached a settlement
on all matters whereby New Cities agreed to pay Legend $100,000, net of $5,887  
for the reimbursement of utilities and services, related to the settlement for  
the water services agreement and convey Lot 40 to Legend. Legend agreed to pay  
New Cities $119,743 for certain development costs associated with Lot 40 and to 
remove the Lis Pendens from Lot 40.                                             

The Company is not aware of any other material pending legal proceedings as of  
March 31, 2000.                                                                 

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

There were no matters submitted to a vote of stockholders during the fourth     
quarter of the year ended December 31, 1999.                                    

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PART II 

ITEM 5.  MARKET FOR THE REGISTRANT'S SHARES AND RELATED SHAREHOLDER MATTERS     

There is no established public trading market for the Company's shares of common
stock. The Company has not declared cash dividends on its common stock since the
year ended December 31, 1989, nor does the Company anticipate the declaration of
any such dividends in the near future. See Item 7, "Management's Discussion and 
Analysis of Financial Condition and Results of Operations" for further details. 

At March 31, 2000, there were 8,656 record holders of the Company's shares of   
common stock. Holdings owns approximately 80% of the outstanding common shares  
of the Company.                                                                 

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ITEM 6.  SELECTED FINANCIAL DATA                                                

For financial reporting purposes, the December 31, 1996 Merger of Banyan and    
RGI/US was treated as a recapitalization of RGI/US, with RGI/US as the acquirer 
of Banyan. Accordingly, the historical consolidated financial statements of     
Legend and the selected financial data presented below for 1995 and 1996 are    
those of RGI/US.                                                                

                                                        [Enlarge/Download Table]


                                                        For the Year Ended December 31,                                  
                        -------------------------------------------------------------------------------------------------
                             1999                 1998                 1997              1996 (2)             1995       
                        ----------------     ----------------     ---------------     ---------------    ----------------
                                                                                                                         
Cash and Cash                                                                                                            
Equivalents             $     2,902,359      $     4,446,864      $   12,732,681      $    1,529,898     $     578,906   
                        ===============      ===============      ==============      ==============     =============   
Investment in Real                                                                                                       
Estate (1)              $    75,806,841      $    82,873,914      $  103,857,159      $  128,834,222     $  21,984,169   
                        ===============      ===============      ==============      ==============     =============   
Properties Owned at                                                                                                      
December 31 (1)                       3                    4                   4                   6                 3   
                        ===============      ===============      ==============      ==============     =============   
Total Assets            $   127,688,960      $   147,558,291      $  162,870,552      $  184,110,129     $  40,555,418   
                        ===============      ===============      ==============      ==============     =============   

Notes Payable to Banks                                                                                                   
and Others              $    21,587,213      $    40,722,737      $   60,411,332      $   86,700,617     $  23,288,065   
                        ===============      ===============      ==============      ==============     =============   

Payables to Related                                                                                                      
Parties                 $    88,661,961      $    84,744,478      $   72,893,927      $   47,609,097     $  25,728,682   
                        ===============      ===============      ==============      ==============     =============   
Total Revenues          $    74,976,482      $    75,733,456      $   55,627,898      $   36,623,291     $   2,088,247   
                        ===============      ===============      ==============      ==============     =============   
Income Tax Benefit      $     9,331,542      $         --         $       --          $        --        $        --     
                        ===============      ===============      ==============      ==============     =============   
Net Loss                $    (3,313,919)     $  (12,136,973)      $ (14,505,906)      $  (2,153,583)     $ (4,069,032)   
                        ===============      ===============      ==============      ==============     =============   
Net Loss Per Share of                                                                                                    
Common Stock  - basic                                                                                                    
and diluted (3)         $        (0.53)      $        (1.93)      $       (2.31)      $        (.49)     $       (.93)   
                        ===============      ===============      ==============      ==============     =============   

(1)      "Investments in Real Estate" and "Properties Owned at December 31"     
         include investments in Grand Harbor and Oak Harbor through December 31,
1995.                                                         

(2)      Effective January 1, 1996, Grand Harbor Associates, Inc. (a            
         wholly-owned subsidiary of Legend), a 45% owner of the Grand Harbor and
         Oak Harbor projects (the Projects), acquired an additional 45% interest
    in the Projects. Additionally, effective December 31, 1996, RGI/US
        merged with Banyan. Both of these business combinations were accounted
         for under the purchase method of accounting, wherein the purchase price
         was allocated to the assets acquired and liabilities assumed based upon
      their relative fair values. The accounts of these acquired companies
       have been included in the consolidated financial statements of Legend
from the acquisition dates.                                   

(3)      For the years ended December 31, 1999 and 1998 there were 6,290,874    
     shares outstanding. For the years ended December 31, 1997, 1996 and
       1995 the weighted average number of shares outstanding was 6,286,322,
       4,392,163 and 4,386,983, respectively, due to the recapitalization of
    RGI/US on December 31, 1996 and the sale of 34,130 shares in 1996.

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ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND          
RESULTS OF OPERATIONS                                                           

OVERVIEW                                                                        

Legend Properties, Inc., formerly known as Banyan Mortgage Investment Fund (the 
Company or Legend), is the surviving corporation from the December 31, 1996     
merger (the Merger) of Banyan Mortgage Investment Fund (Banyan) with RGI U.S.   
Holdings, Inc. (RGI/US). For financial reporting purposes, the Merger was       
treated as a recapitalization of RGI/US, with RGI/US as the acquirer of Banyan. 
As of December 31, 1996, the historical consolidated financial statements of    
RGI/US became those of Legend Properties, Inc.                                  

As of December 31, 1999, Holdings owns approximately 80% of the outstanding     
common shares of the Company. On October 15, 1999 the Company received a        
proposal from Holdings for the merger of the Company with a wholly-owned        
subsidiary of Holdings. The Company's Board of Directors established a special  
committee to evaluate and consider the proposal. On January 6, 2000 the Board of
Directors approved a merger and the Company and Holdings executed a Merger      
Agreement where Holdings will acquire all of the outstanding shares, not        
currently held by Holdings, for $0.50 per share in cash. The merger is subject  
to, among other things, approval by the shareholders and compliance with all    
applicable regulatory and governmental requirements.                            

Since its merger in December 1996, Legend has focused its management efforts and
financial resources on its core assets on the East Coast. Non-core assets,      
including a 565-acre land parcel (Laguna Seca Ranch) located in California and a
164,724 square foot retail shopping center located in the state of Washington   
(Lynnwood Center), were sold during 1997 for approximately $33 million. During  
October 1998, Legend sold the Chapman's Landing project to the State of Maryland
and an environmental group for a total sales price of $28.5 million. During     
September 1999, the Company sold the Ashburn Corporate Center to an unaffiliated
third party for approximately $15.2 million. The Company had acquired the front 
parcel of the project earlier in the year.                                      

Legend is currently focused on continuing the development of infrastructure,    
amenities, residential land parcels and residential units at Grand Harbor, Oak  
Harbor and Southbridge consistent with approved zoning and development plans. At
Southbridge, Legend intends to rezone the future phases of the project to allow 
continuation of its development plan. As Southbridge is still in the initial    
stages of development, where major investments in infrastructure improvements   
are required to realize the market potential, significant financial resources   
have been committed to infrastructure and land parcel improvements. The         
Company's ability to fully implement its business plan is dependent on, among   
other things, securing long-term and short-term financing related to the        
developments on acceptable terms. There can be no assurances that the Company   
will be able to obtain the necessary financing on acceptable terms, if at all.  
See "Factors Affecting Legend's Business Plan" below.                           

LIQUIDITY AND CAPITAL RESOURCES                                                 

Historically, the Company has utilized internally generated funds, third party  
borrowings and loans from Holdings and affiliated entities to fund its          
construction and development activities, and ongoing operating expenses.        
Deferral of interest due to Holdings pursuant to the terms of the loan          
agreements has also allowed the Company to maintain and preserve its liquidity  
and capital resources.                                                          

During the year ended December 31, 1999 the Company utilized existing cash and  
cash equivalents, net sales proceeds from the sale of the Ashburn Corporate     
Center and third party borrowings to fund its development, construction and     
operating activities. The Company borrowed $3,750,000 from Holdings on a        
short-term basis which was repaid, along with accrued interest. In addition, a  
$1,743,682 principal payment was also repaid to Holdings.                       

During 2000, the Company contemplates continued expenditures for the development
of residential lots and construction of residential homes at Grand Harbor, Oak  
Harbor and Southbridge, so that finished units and lots will be available during
2000 and beyond to satisfy existing real estate sales contracts. For Grand      
Harbor and Oak Harbor, the Company anticipates utilizing existing construction  
lines for the majority of the construction financing and securing additional    
construction lines from existing external lenders for the remainder. At         
Southbridge, the Company must arrange for development financing.                

As of December 31, 1999, the Company's debt obligations, including payables to  
related parties of $88,661,961, totaled $110,249,174 of which $5,803,953 matures
during 2000. None of these maturities relates to loans from                     

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Holdings. In addition to the debt maturities under existing financings, as noted
above, the Company requires additional financings to advance its business plan. 
As of December 31, 1999, the Company had $2,902,359 of cash and cash            
equivalents, which will not be sufficient to fund these obligations.            

The Company expects to meet its existing debt obligations that mature during    
2000 by the renewal and extension of existing construction lines, and internally
generated funds from real estate sales and operations. Based on alternatives    
available, Management believes that sufficient funds will be available to meet  
its obligations during 2000. If sufficient funds are not available from the     
above sources, the Company anticipates delaying certain interest payments as    
allowed under the debt agreements. The Company also has available, if needed, a 
$5 million credit facility from Holdings, which was unused at December 31, 1999.

For future construction and development activities, the Company anticipates     
utilizing existing construction lines or securing additional construction lines 
or development financing as noted above. Once construction lines or development 
financing are secured, they are typically renewed on an annual basis.           

There can be no assurance that the Company will be able to secure the necessary 
future construction and development financing to implement its plan or that, if 
available, the terms and conditions will be acceptable to the Company. If the   
Company is unable to secure the necessary additional financing or capital when  
needed, the plans for its projects will likely be materially revised, which     
would have a material adverse effect on the Company's financial condition and   
results of operations. See "Factors Affecting Legend's Business Plan".          

For each of Legend's projects, cash flow generated from operations can differ   
substantially from reported earnings, depending on the status of the development
cycle. At Southbridge, which is in the initial stages of development,           
significant cash outlays are required for, among other things, land             
acquisitions, processing zoning and other regulatory approvals, construction of 
amenities, major roadways, infrastructure and debt service. Since a significant 
part of these initial expenditures is capitalized, income reported for financial
statement purposes during the initial years may significantly exceed operating  
cash flow. At Grand Harbor and Oak Harbor, which have completed the initial     
stages of development, operating cash flow can exceed earnings reported for     
financial statement purposes, since the initial expenditures, which were        
incurred in a prior period and capitalized, are now being included as expenses. 

1999 compared to 1998                                                           

Legend's cash and cash equivalents balance at December 31, 1999 and 1998, was   
$2,902,359 and $4,446,864, respectively. The decrease is attributable to cash   
used in financing activities of $23,320,522, which is partially offset by cash  
provided by operating and investing activities of $13,233,674 and $8,542,343,   
respectively.                                                                   

Cash Flows from Operating Activities: For the year ended December 31, 1999,     
operating activities provided cash of $13,233,674.                              

Cash provided by operations in 1999 was primarily due to the following:         

-        A net $14,983,248 reduction in inventory and assets held for sale.     
        Assets held for sale decreased a net $7,916,175 million resulting from
       the sale of Ashburn. Real estate inventory decreased a net $7,067,073
       million, due to unit and lot sales of 60, 28 and 135 at Grand Harbor,
     Oak Harbor and Southbridge, respectively, which reduced real estate
  inventory by $33,052,315. This decrease was offset by additional
development and construction activities totaling $25,985,242. 

-        Related party interest expense of $7,513,708 that was accrued but not  
       paid during 1999. This accrued interest was capitalized into the loan
  balance on December 31, 1999 in accordance with the terms of the
related loan agreements.                                      

-        Deferred tax benefit of $4,573,900 that was recorded but not paid in   
    1999, related to the income tax benefit anticipated to be realized
by the utilization of the Company's 1999 operating loss.      

-        Depreciation and amortization of $2,075,836 that resulted primarily    
        from fixed asset depreciation for Grand Harbor and Oak Harbor and loan
cost amortization.                                            

Partially offset by the following:                                              

-        A net loss of $3,313,919 that was caused principally by substantial    
interest expense, corporate overhead, including severance and 
      relocation costs of $850,000, and operating losses at Oak Harbor and
        Southbridge. These were partially offset by operating profits at Grand
Harbor and Ashburn and the income tax benefit                 

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   recorded. Grand Harbor's operating profit resulted primarily from
         residential unit sales which more than offset the losses generated from
         club operations. Ashburn's operating profit resulted primarily from the
         gain from the sale of the Ashburn Corporate Center. Sales at Oak Harbor
      and Southbridge exceeded prior years but were not sufficient for the
      projects to cover their overhead, and in the case of Oak Harbor, the
losses generated by the club and assisted living operations.  

-        An increase in accounts and notes receivable and other assets of       
   $2,113,928 and a decrease in accounts payable and other notes and
        liabilities of $1,337,371 during 1999. The increase in other assets is
       primarily attributable to the recording of a related party receivable
      representing the income tax benefit realized from the utilization of
       the Company's 1998 operating loss. Fluctuations in these accounts are
     generally due to the timing of the collection of accounts and notes
    receivable and the payment of certain liabilities, including trade
payables, advances from customers and prepaid expenses. These 
        fluctuations can vary significantly from period to period depending on
the timing of sale closing, and development and construction  
 activities. Due to the nature of Legend's business, significant
     fluctuations in operating assets and liabilities are not considered
unusual.                                                      

Cash Flows from Investing Activities: The Company generated $8,542,343 from     
investing activities during 1999. Certain deposits that were held as collateral 
against a bank loan were released and used to pay down that debt pursuant to a  
renegotiated loan agreement. Customer deposits also declined as a result of     
sales activity which, when combined with the collateral release, resulted in a  
decline in restricted cash and investments of $8,415,490. Proceeds from the sale
of property and equipment totaled $830,062, which results primarily from the    
sale of a condominium unit held by the Company in Grand Harbor. These changes   
were partially offset by the purchase of $703,209 of property and equipment.    

Cash Flows from Financing Activities: For the year ended December 31, 1999,     
Legend utilized net cash in financing activities in the amount of $23,320,522,  
primarily for the repayment of $34,009,795 and $7,741,661 of unaffiliated and   
related party debt, respectively, partially offset by proceeds from borrowings  
of $14,874,271 from unaffiliated parties and $3,750,000 from related parties.   

The Company borrowed $14,874,271 from unaffiliated parties, primarily at Grand  
Harbor ($10,948,516) and Oak Harbor ($3,094,070) under existing construction    
lines, to fund construction and development costs. Debt repayments to           
unaffiliated parties totaled $34,009,795 (Grand Harbor $13,183,277, Oak Harbor  
$11,334,354, Southbridge $2,980,000 and Ashburn $5,940,000). These funds were   
generated from the sale of residential units and club memberships, the release  
of the collateral deposit discussed above, the sale of the Ashburn Corporate    
Center and existing cash sources. In addition, the Company borrowed $3,750,000  
from Holdings, which was used to pay $2,248,279 of maturing related party debt  
and a portion of external debt. This advance along with accrued interest and an 
additional $1,743,382 principal payment on another piece of the related party   
debt was repaid with the proceeds from the Ashburn sale.                        

1998 compared to 1997                                                           

Legend's cash and cash equivalents balance at December 31, 1998, and December   
31, 1997, was $4,446,864 and $12,732,681, respectively. The decrease is         
attributable to cash used in investing and financing activities of $4,578,762   
and $13,998,293, respectively, which is partially offset by cash provided by    
operating activities of $10,291,238.                                            

Cash Flows from Operating Activities: For the year ended December 31, 1998,     
operating activities provided cash of $10,291,238.                              

Cash provided by operations in 1998 was primarily due to the following:         

-        A net $13,067,070 reduction in inventory and assets held for sale      
        resulting from the sale of Chapman's Landing that was partially offset
  by the acquisition of Ashburn for approximately $7.9 million. In
       addition, development activities continued at Southbridge, which also
     offset the inventory decline related to the Chapman's Landing sale.
      Total land acquisition, development and construction activities were
     $36,561,117. This was offset by an aggregate inventory reduction of
         $49,628,187, due to the Chapman's Landing sale and unit or lot sales of
64, 22, and 63 at Grand Harbor, Oak Harbor and Southbridge,   
respectively.                                                 

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-        Related party interest expense of $5,853,716 that was accrued but not  
       paid during 1998. This accrued interest was capitalized into the loan
  balance on December 31, 1998 in accordance with the terms of the
related loan agreements.                                      

-        Depreciation and amortization of $2,977,467 that resulted primarily    
        from fixed asset depreciation for Grand Harbor and Oak Harbor and loan
cost amortization.                                            

-        An increase in accounts payable and other notes and liabilities of     
       $4,662,756 offset by an increase in accounts and notes receivable and
        other assets of $4,132,798 during 1998. Fluctuations in these accounts
        are generally due to the timing of the payment of certain liabilities,
      including trade payables, advances from customers, prepaid expenses,
         and the collection of accounts and notes receivable. These fluctuations
         can vary significantly from period to period depending on the timing of
       sale closing, and development and construction activities. Due to the
    nature of Legend's business, significant fluctuations in operating
assets and liabilities are not considered unusual.            

Partially offset by the following:                                              

-        A net loss of $12,136,973 that was caused principally by substantial   
  interest expense, corporate overhead and operating losses at Oak
       Harbor, Ashburn and Southbridge. These were partially counterbalanced
    by operating profits at Grand Harbor and the gain from the sale of
        Chapman's Landing. Sales at Oak Harbor were less than expected in 1998
     and lower than 1997. Ashburn incurred certain costs associated with
       holding and marketing the property during the period it has been held
     for sale without any compensating revenues. Southbridge experienced
        delays in developing lots due to an extremely wet winter and spring in
     the Washington, DC area, and closed fewer lots than expected. Grand
  Harbor's operating profits resulted primarily from the sale of a
      20-acre parcel of raw land and better than expected residential unit
sales.                                                        

Cash Flows from Investing Activities: Legend used $4,578,762 in investing       
activities during 1998. The majority of this was the result of $3,787,322       
increase in restricted cash and investments, that arose chiefly from the growth 
of customer sales deposit cash at Grand Harbor as the backlog has expanded from 
12 to 39 units between December 31, 1997 and 1998. The remainder of the increase
relates to $791,440 in purchases of property and equipment during 1998.         

Cash Flows from Financing Activities: For the year ended December 31, 1998,     
Legend utilized net cash in financing activities in the amount of $13,998,293   
primarily for the repayment of $41,258,127 of external debt, partially offset by
proceeds from borrowings of $21,569,532 from external parties and $6,000,000    
from related parties.                                                           

The Company borrowed $21,569,532 from external parties that was mainly used at  
Grand Harbor ($11,698,130) and Oak Harbor ($3,931,402) to fund construction and 
development costs. Additional funds were borrowed at Ashburn Corporate Center   
($5,940,000) to finance the acquisition of the first parcel as was previously   
described. Debt repayments to external parties totaled $41,258,127 (Corporate   
$996,220, Grand Harbor $23,642,961 and Oak Harbor $16,618,946). These funds were
generated from the sale of Chapman's Landing (described earlier), sale of       
residential units and club memberships, and existing cash sources. Moreover, the
Company borrowed $6,000,000 from Holdings, which was used to pay off existing   
external debt and fund construction and development activities, and ongoing     
operations.                                                                     

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RESULTS OF OPERATIONS                                                           

Results of operations for the year ended December 31,1999 include the           
consolidated revenues and expenses of Grand Harbor, Oak Harbor, Southbridge and 
Ashburn. Results of operations for the year ended December 31,1998 include the  
consolidated revenues and expenses of Grand Harbor, Oak Harbor, Southbridge,    
Ashburn and Chapman's Landing. Results of operations for the year ended December
31,1997 consist of the consolidated revenues and expenses for Grand Harbor, Oak 
Harbor, Southbridge, Chapman's Landing, Laguna Seca Ranch and the Lynnwood      
Center. The 1999 change was the sale of Ashburn in September, 1999 while 1998   
changes were the acquisition of Ashburn in March 1998 and the sale of Chapman's 
Landing in October 1998. The 1997 changes were the sales of the Laguna Seca     
Ranch and the Lynnwood Center in November and December 1997, respectively.      
Accordingly, the 1999, 1998 and 1997 results of operations are not comparable.  

1999 compared to 1998                                                           

Total revenues dropped $756,974 between 1998 and 1999 due to a decrease in real 
estate sales revenues which was partially offset by increases in club           
operations, patient services and other revenues. These changes are discussed in 
further detail below.                                                           

Real estate sales revenues decreased $2,982,020 in 1999 as compared to 1998, as 
a result of a decrease in revenues from the bulk sale of properties. During     
1998, Chapman's Landing was sold for $28.5 million while in 1999 Ashburn was    
sold for $15.2 million. In addition, a 20-acre land parcel was also sold during 
1998 at Grand Harbor for $1.9 million yielding a net decrease of $15.2 million  
in bulk sales revenue. This decline was substantially offset by increases in    
unit and/or lot sales at Grand Harbor ($24,413,833), Oak Harbor ($11,142,766)   
and Southbridge ($5,895,581).                                                   

Grand Harbor's real estate sales totaled 60 units in 1999 versus 64 units in    
1998 (which included 10 resale units). The average sales price was approximately
$436,000 in 1999 compared to $365,000 for 1998. At Oak Harbor, 28 units were    
sold during 1999 as opposed to 22 units during 1998, at an average sales price  
of approximately $382,000 in 1999 compared to $390,000 in 1998. Sales prices    
range from $200,000 to $1,100,000 at Grand Harbor and $250,000 to $635,000 at   
Oak Harbor. Accordingly average unit sales prices may fluctuate dramatically    
from period to period depending upon factors such as the unit type and location 
of the product sold.                                                            

At Southbridge, lot sales increased from 63 in 1998 to 135 in 1999. The increase
from 1998 to 1999 occurred primarily because additional sections were opened in 
1999 and certain sections had a full year of deliveries in 1999 versus a partial
year in 1998. The average Southbridge lot sale price for 1999 was $42,000, which
is comparable to the 1998 average of $40,500.                                   

The Company's backlog at December 31, 1999 was as follows:                      

                                                                [Download Table]

                                          CONTRACT  
                           UNITS           VALUE    
                        ---------      -------------
                                                    
Grand Harbor                   33      $  17,126,137
Oak Harbor                     14          6,390,600
Southbridge                   436         21,033,500
                        ---------      -------------
                              483      $  44,550,237
                        =========      =============

Club memberships increased between 1998 and 1999 as a result of the continued   
progress in the sales and development activities at both Grand Harbor and Oak   
Harbor, and was the chief component in the rise in club operations revenue.     

Patient services revenues increased slightly in 1999 as compared to 1998 due to 
slightly higher patient levels.                                                 

Total operating costs and expenses rose $619,942. This is mainly due to an      
increase in club operating costs partially offset by a decrease in cost of real 
estate sales.                                                                   

Real estate sales expense decreased in 1999 from 1998 by $686,378 primarily due 
to the $10.5 million decrease in the costs associated with the bulk sale of     
property ($13.3 million in 1999 for Ashburn versus $23.8 million in 1998 for    
Chapman's Landing and the 20-acre Grand Harbor land parcel). The decrease was   
almost completely offset by the increase in the overall number of units sold and
changes in unit type, which were described previously. The gross                

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margin as a percentage of real estate sales revenues was 21% (24% excluding     
Ashburn) as compared to 24% for 1998 (26% excluding Chapman's Landing and the   
sale of a 20-acre land parcel at Grand Harbor). The slight decline in the       
average gross margin is attributable to an increase in the number of Southbridge
units in the total, which generate a lower gross margin versus Grand Harbor and 
Oak Harbor. Gross margins by project, excluding bulk land sales, are comparable 
for 1999 and 1998. Even so, gross margins realized on the sale of residential   
units at Grand Harbor and Oak Harbor can fluctuate significantly from period to 
period depending upon the type and location of the product sold.                

Club operation expenses increased in 1999 over 1998 mainly in response to the   
growth in club operation revenues.                                              

Selling, general and administrative costs declined slightly in 1999 as compared 
to 1998 due to a reduction in professional fees from better management of those 
relationships and reductions in real estate taxes and homeowner association     
subsidies resulting from the general sales progress of the projects. Also       
contributing to the decline was the elimination of operating expenses for       
Chapman's Landing in 1999 since the project was sold during 1998. These cost    
reductions were almost completely offset by the onetime expense of $850,000 for 
severance and relocation costs in 1999.                                         

Patient services costs and expenses increased slightly in 1999 as compared to   
1998 which is attributable to higher patient levels.                            

Net other expense decreased $868,428 between 1999 and 1998 primarily due to a   
decline in external debt interest expense, offset by an increase in related     
party debt interest expense and a drop in interest income. The interest expense 
decline resulted from a net reduction in outstanding external debt. Reductions  
in cash and cash equivalents available for short-term investment account for    
most of the decline in interest income between 1999 and 1998.                   

Income tax benefit generated in 1999 was $9,331,542 versus $0 in 1998. The 1999 
income tax benefit resulted from the realized and anticipated to be realized    
utilization of the Company's 1998 and 1999 operating losses by an affiliated    
consolidated tax group, pursuant to a new Tax Sharing and Allocation Agreement  
which has an effective date retroactive to January 1, 1998.                     

These changes yielded a decrease in the net loss of $8,823,054 (a net loss for  
1999 of $3,313,919 or $0.53 per share, as compared to $12,136,973 or $1.93 per  
share for 1998).                                                                

1998 compared to 1997                                                           

Total revenues rose $20,105,558 between 1997 and 1998. This is mainly because of
increases in real estate revenues, and to a lesser extent improvements in club  
operating revenues. These are discussed in further detail below.                

Real estate sales revenues grew $21,623,393 between 1997 and 1998 primarily as a
result of increases in revenues from the bulk sale of properties. During 1997,  
Laguna Seca was sold for approximately $12.8 million whereas Chapman's Landing  
was sold in 1998 for $28.5 million. Moreover, a 20-acre land parcel was sold    
during 1998 at Grand Harbor for $1.9 million yielding a net increase of $17.6   
million in bulk sales revenue. The remainder of the change relates to a net     
increase in unit and lot sales at Grand Harbor ($5,609,412 increase), Oak Harbor
($3,081,529 decrease) and Southbridge ($1,380,989 increase).                    

Grand Harbor's real estate sales rose to 64 units in 1998 from 44 units in 1997 
resulting from improved marketing strategies and the overall health of the US   
economy. The average sales price was approximately $407,000 in 1997 compared    
with nearly $365,000 for 1998. At Oak Harbor, 22 units were sold during 1998 as 
opposed to 30 units during 1997 for an approximate average sales price of       
$390,000 for both 1998 and 1997. Oak Harbor completed its first 24-unit         
condominium during March 1997, and at that time had a majority of those units   
under contract. These units closed soon thereafter, which substantially         
increased sales for 1997 over 1998. Sales prices range from $165,000 to         
$1,100,000 at Grand Harbor, and $250,000 to $635,000 at Oak Harbor. Accordingly 
average unit sales prices may fluctuate dramatically from period to period      
depending upon factors such as the unit type and location of the product sold.  

At Southbridge, lot sales increased from 12 in 1997 to 63 in 1998. This occurred
despite poor weather (in particular excessive rain) in the Washington, DC area  
during the winter and spring of 1998, which stalled lot development activity.   
The rise from 1997 to 1998 occurred primarily because sales for 1997 were       
restrained due to delays in                                                     

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development activity. This was caused by the previously discussed Merger and    
attendant litigation. The average Southbridge lot revenue for 1998 was $40,500, 
which is comparable to the 1997 average of $42,500.                             

Club memberships increased between 1997 and 1998 as a result of the continued   
progress in the sales and development activities at both Grand Harbor and Oak   
Harbor, and was the chief component in the rise in club operations revenue. The 
rental revenue for 1997 relates to the Lynnwood Center, which was sold during   
1997.                                                                           

Accordingly, there is no such comparable revenue item for 1998.                 

Total operating costs and expenses rose $17,516,156. This is mainly due to      
increased real estate sales expenses and club operating costs, net of a decrease
in selling, general and administrative expenses.                                

A $15.0 million rise in the costs associated with the bulk sale of property     
($23.8 million in 1998 for Chapman's Landing and the 20-acre Grand Harbor land  
parcel versus $8.8 million during 1997 for Laguna Seca) was primarily           
responsible for the $18,284,255 increase in real estate sales expenses between  
1997 and 1998. The balance of the increase relates mainly to the growth in the  
overall number of units sold and changes in unit type, which were described     
previously. The gross margin as a percentage of real estate sales revenues was  
24% for 1998 (26% excluding Chapman's Landing and the sale of a 20-acre land    
parcel at Grand Harbor) as compared to 28% for 1997 (27% excluding Laguna Seca).
The gross margins excluding bulk land sales are comparable for 1998 and 1997.   
Even so, gross margins realized on the sale of residential units at Grand Harbor
and Oak Harbor can fluctuate significantly from period to period depending upon 
the type and location of the product sold.                                      

Club operation expenses increased in 1998 over 1997 mainly in response to the   
growth in club operation revenues. Selling, general and administrative costs for
1997 included expenses for relocating the corporate offices and certain costs   
for litigation associated with the merger and expenses for settling lawsuits    
raised in connection with the merger. Accordingly, the 1997 costs include       
certain "onetime" costs that were not repeated in 1998. Moreover, these costs   
fell between 1997 and 1998 as real estate taxes and homeowner association       
subsidies declined with the general sales progress of the projects. This was    
coupled with reductions in professional fees from better management of those    
relationships and other similar factors. The total effect was a $2,851,007      
reduction in selling, general and administrative costs between 1997 and 1998.   

Net other expense decreased $32,247 between 1997 and 1998 primarily due to a    
decline in interest expense, offset by a drop in interest income. The interest  
expense decline resulted from a net reduction in external debt. Reductions in   
cash and cash equivalents available for short-term investment account for most  
of the decline in interest income between 1997 and 1998.                        

These changes yielded a decrease in the net loss of $2,368,933 (a net loss for  
1998 of $12,136,973 or $1.93 per share, as compared to $14,505,906 or $2.31 per 
share for 1997).                                                                

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FACTORS AFFECTING LEGEND'S BUSINESS PLAN                                        

       In addition to the other information contained in this Annual Report,
the following factors should be considered carefully:                           

Interest Rates                                                                  

  Legend's business and financial condition may be affected during
inflationary periods as a result of the higher costs and interest rates that    
accompany these cycles. High inflation and interest rates push financing and    
construction costs upward, which may adversely impact the Company's operations. 
Moreover, housing demand typically declines during such periods because         
financing is difficult, and at times impossible, for potential buyers to obtain 
on acceptable terms, thereby depressing demand for the Company's products.      

Substantial Debt Obligations                                                    

    As of December 31, 1999 the Company's outstanding notes payable to
banks and others aggregated $21,587,213, of which $5,803,953 matures in 2000,   
$6,696,620 in 2001 and $9,086,640 in 2002 and thereafter. Additionally, as of   
December 31, 1999 payables to related parties totaled $88,661,961, which matures
in 2003. As of December 31, 1999 the Company had $2,902,359 of cash and cash    
equivalents, which will not be sufficient to fund these obligations.            

There can be no assurance that the Company will be able to obtain the necessary 
construction and development financing to implement its plan or that, if        
available, the terms and conditions will be acceptable to the Company. If the   
Company is unable to secure the necessary additional financing or capital when  
needed, the plans for its projects will likely be materially revised, which     
would have a material adverse effect on the Company's financial condition and   
results of operations.                                                          

       Legend's ability to service its debts and other obligations when they
become due will also depend on various factors affecting its properties, such as
operating expenses and construction schedules, which, in turn, may be adversely 
affected by general and local economic conditions. Certain expenditures, such as
loan payments and real estate taxes are typically fixed obligations and are not 
necessarily decreased by adverse events affecting revenues generated by the     
properties. Therefore, expenditures for developing properties may exceed the    
income derived from the sale of lots or homes and Legend would have to obtain   
funds from other sources to operate and maintain a property in order to protect 
its investment.                                                                 

Need for Additional Capital                                                     

        Funds from operations and proceeds from the sale of assets will not be
sufficient to allow Legend to complete its business plans for its remaining     
properties. There can be no assurance that additional capital will be available 
to Legend or that, if available, the terms and conditions will be acceptable to 
Legend or will not be dilutive to Legend's stockholders. A failure to secure    
additional capital when needed would have a material adverse effect on Legend's 
results of operation and financial condition.                                   

Real Estate Investment Risks                                                    

     Real property investments are subject to certain risks that are not
always susceptible to prediction or control. The cash flow generated by, and    
capital appreciation realized from, real property investments may be adversely  
affected by the national and regional economic climate (which, in turn, may be  
adversely impacted by plant closings, industry slow downs, income tax rates,    
interest rates, demographic changes and other factors), local real estate       
conditions (such as oversupply of, or reduced demand for rental space or housing
in the area), the attractiveness of the properties, zoning and other regulatory 
restrictions, competition from other land developers or developments, increased 
operating costs (including maintenance costs, insurance premiums and real estate
taxes), perceptions by tenants or potential buyers of the safety, convenience   
and attractiveness of the property and the willingness of the owner of the      
property to provide capable management and adequate maintenance. In light of the
foregoing factors, there can be no assurance that Legend's properties will be   
salable at a price or prices sufficient to recover costs.                       

         The cash flow generated by, or capital appreciation from, real property
investments may also be adversely impacted by changes in governmental           
regulations, zoning or tax laws, potential environmental or other legal         
liabilities and                                                                 

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changes in interest rates. Real estate investments, particularly development    
properties, are also relatively illiquid and, therefore, Legend's ability to    
vary its portfolio promptly in response to changes in economic or other         
conditions will in all likelihood be limited. In the event Legend is forced to  
sell a property, Legend may sustain a loss due to the inherent lack of liquidity
in such an investment.                                                          

Development and Construction Activities                                         

Development and construction activities are subject to numerous risks including 
delays in construction, certain of which (for example, acts of God, labor       
strikes or shortages of supplies) may not be controllable, and quality of       
construction, which depends upon a number of factors including the professional 
capabilities of the contractor(s), site constraints, adherence to plans and     
specifications, adequacy of supervision, and the financial ability of the       
developer to bear any unanticipated additional costs of construction. Similarly,
development and construction activities generally require various governmental  
and other approvals and permits, the issuance or granting of these is not       
certain. There can be no assurance Legend will be able to secure all            
entitlements and permits necessary to complete the development and construction 
of each of its properties. Further, these activities require the expenditure of 
funds on, and the devotion of management's time to, projects which may not be   
completed or which, if completed, may not be completed on time or on budget.    
Likewise, financing may not be available on favorable terms, if at all, for     
development and construction projects and delays in completing development and  
construction could result in increases in debt service costs.                   

Legend currently provides, and will continue to provide, certain warranties with
respect to the quality of the construction of the homes built at Grand Harbor   
and Oak Harbor. In addition, Florida law requires homebuilders to provide for   
certain additional warranties that cannot be disclaimed, regardless of whether  
there are actual deficiencies in the quality of materials used or the           
construction of the homes built at Grand Harbor and Oak Harbor. The cost of     
settling, or the failure to settle, any presently unasserted claims in the      
future may have a material adverse effect on Legend's future results of         
operations and financial condition.                                             

Lack of Geographic Diversification                                              

The Southbridge property is located in close proximity to Washington, D.C.      
Similarly, Grand Harbor and Oak Harbor are both located in close proximity to   
Vero Beach, Florida. Economic weakness or recession in either of these two      
areas, or the occurrence of other adverse circumstances could have a material   
adverse effect on Legend's results of operation and financial condition.        

Government Regulation                                                           

Land Use and Zoning. Federal, state and local regulations may be promulgated    
which restrict or curtail certain uses of land or existing structures or require
renovation or alteration of these structures. Any restrictions on the           
anticipated development of the Company's properties could affect the market for 
and price of the lots or homes and prevent or delay sales. Furthermore,         
obtaining any additional permits or other consents of local governments for     
development of properties may require public hearings and meetings with public  
officials and community groups. There can be no assurance that some or all of   
the entitlements relating to the Company's properties will not be revoked or    
modified in the future. From time to time, governmental entities have imposed   
limitations on the development of certain areas. In addition, it may be         
difficult or impossible to modify existing zoning to respond to changing market 
conditions in order to increase the realizable value of the property. Any       
revocation or modification, or refusal to modify existing entitlements, could   
have a material adverse effect on the Company's results of operations and       
financial condition.                                                            

Environmental Matters. Under various federal, state and local laws, ordinances  
and regulations, an owner, operator, manager or developer of real estate may be 
liable for the cost of removing or remediating certain hazardous or toxic       
substances (including asbestos containing materials) on, under or in real estate
owned, operated, managed or developed. These enactments often impose liability  
without regard to whether the owner, operator, manager or developer knew of, or 
was responsible for, the presence of the hazardous or toxic substances. The cost
of any required remediation and the accompanying liability is generally not     
limited under these enactments and could exceed the value of the property or the
aggregate assets of the owner, operator, manager or developer. The presence of  
hazardous or toxic substances, or the failure to properly remediate these       
substances, may adversely affect an owner's ability to sell or rent the         
property, or to borrow money using the property as collateral. In addition,     
liability may be imposed for releasing asbestos containing materials into the   
air. In connection with owning and operating its                                

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properties, Legend may be potentially liable for these costs. Legend does not   
maintain insurance for any of these potential environmental liabilities and does
not anticipate securing any such insurance in the foreseeable future.           

Americans With Disabilities Act. Under the Americans with Disabilities Act of   
1990 (the "ADA"), all public accommodations must comply with certain federal    
requirements related to access and use by disabled persons. These requirements  
became effective in 1992. The ADA has separate compliance requirements for      
"public accommodations" and "commercial facilities" but generally requires      
making buildings accessible to people with disabilities. Noncompliance with     
these requirements could result in the imposition of fines by the federal       
government or an award of damages to private litigants. Management believes that
Legend is substantially in compliance with federal requirements related to      
access and use by disabled persons.                                             

Healthcare Regulations. Healthcare operations in the State of Florida are       
subject to varying degrees of regulation and licensing by health or social      
service agencies and other regulatory authorities. Changes in the laws or new   
interpretations of existing laws can have a significant effect on methods and   
costs of doing business. Currently, no federal rules explicitly define or       
regulate assisted living. In addition, the Royal Palm Convalescent Center does  
not accept Medicare or Medicaid reimbursement. However, federal, state or local 
laws or regulatory procedures which might adversely affect assisted living      
businesses could be expanded or imposed and changes to licensing and            
certification standards could have a material adverse effect on Legend's results
of operations and financial condition.                                          

Book Value Not Reflective of Current Realizable Value                           

Legend currently evaluates the carrying value of its real property and other    
assets on an ongoing basis relying on a number of factors, including operating  
results, business plans, budgets and economic projections. In addition, Legend  
considers non-financial data such as continuity of personnel, changes in the    
operating environment, competitive information, market trends and client and    
business relationships. The future value of these assets is subject to numerous 
contingencies, including the completion of construction and development. A      
change in any or all of these factors could result in an impairment in value of 
Legend's assets and the realizable value could differ significantly from the    
current carrying value of these assets.                                         

Bankruptcy Risks                                                                

If Legend defaulted on its indebtedness, it may be required to restructure its  
financial affairs under the Federal Bankruptcy Code or seek some other type of  
relief. A restructuring or other reorganization under the Bankruptcy Code or    
otherwise may result in the stockholders losing their entire interest in the    
Company.                                                                        

Issuance of Preferred Stock or Common Stock                                     

Legend's board of directors has the authority to issue preferred stock in one or
more series or classes with such designations, preferences and rights and such  
qualifications, limitations or restrictions as determined by the board. The     
issuance of preferred stock or common stock could have a dilutive or other      
material adverse effect on the holders of Legend's shares of common stock.      

Shares Available for Future Sale                                                

As of December 31, 1999, Holdings owns approximately 80% of Legend's outstanding
shares of common stock. These shares are subject to resale restrictions but a   
portion may, in certain circumstances, be registered for sale. Sales of a       
substantial number of these shares of common stock in the public market or the  
perception that sales occur could adversely affect the market price of the      
common stock and Legend's ability to raise capital in the future.               

Dividend Policy                                                                 

The Company has not paid cash dividends since the first quarter of 1990 and does
not contemplate paying cash dividends until it generates sustainable cash flow  
in excess of its capital needs. There can be no assurance that Legend will ever 
generate sufficient cash flow to pay dividends to its stockholders. Moreover,   
certain of Legend's loan agreements prohibit the payment of dividends. If Legend
issues preferred stock with a dividend, the stockholders' right to receive      
dividends, if any, will be subordinated to that of the holders of preferred     
stock.                                                                          

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ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS           

The Company is exposed to market risks associated with interest rate changes on 
the debt used to fund its construction, development, and operating activities.  
The Company's interest rate risk management objective is to limit the impact of 
interest rate changes on earnings and cash flow and to lower overall borrowing  
costs. The Company uses a mixture of fixed rate debt, interest rate swap        
agreements, and offsetting financial instruments such as annuity contracts to   
mitigate this risk. The Company does not enter into other derivative financial  
instruments for speculative purposes.                                           

The Company's interest rate risk is monitored by management. The table below    
presents the principal amounts, weighted-average interest rates and fair values 
required to evaluate the expected cash flows of the Company under debt and      
related agreements and its sensitivity to interest rate changes at December 31, 
1999.                                                                           

                                                        [Enlarge/Download Table]

                                                                                     Fair 
       (in millions)         2000   2001  2002    2003  2004   Thereafter   Total   Value 
                             ----   ----  ----    ----  ----   -----------   -----   -----
                                                                                          
Fixed rate debt              0.4    0.4    0.3    0.4    0.4       2.5         4.4     4.4
Average interest rate        5.8%   5.8%   5.7%   5.7%   5.6%      5.5%                   

Variable rate LIBOR debt     0.1    0.2    0.2   34.5    0.0       0.0        35.0    35.0
Average interest rate        8.9%   8.9%   8.9%   8.9%   0.0%      0.0%                   

Variable rate prime debt     3.2    3.6    0.0   57.5    0.0       0.0        64.3    64.3
Average interest rate       10.3%  10.4%   0.0%  10.5%   0.0%      0.0%                   

Variable rate bank cost of                                                                
funds debt                   2.1    2.5    1.9    0.0    0.0       0.0         6.5     6.5
Average interest rate        8.7%   8.7%   8.7%   0.0%   0.0%      0.0%                   

The table incorporates those exposures that exist as of December 31, 1999, and  
does not consider those exposures or positions which could arise after that     
date. As a result, the Company's cost of funds with respect to interest rate    
fluctuations will depend on the exposures that arise after December 31, 1999,   
the Company's hedging strategy during that period and interest rates.           

ITEM 8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA               

See Index to Consolidated Financial Statements on Page F-1 of this Report for   
financial statements and financial statement schedules, where applicable.       

See Item 6, "Selected Financial Data," for the supplemental financial           
information specified by Item 302 of Regulation S-K.                            

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND         
FINANCIAL DISCLOSURE                                                            

Not Applicable                                                                  

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PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                    

         The directors and the executive officers of the Company as of March 31,
2000 are:                                                     

Walter E. Auch, Sr.          Director                         
Helge Lund                   Director                         
Jan Petter Storetvedt        Director, Chairman of the Board  
Robert M. Ungerleider        Director                         
Fred E. Welker, III          Director                         
    Peter J. Henn                President and Chief Executive Officer
      Robert B. Cavoto             Vice President, Chief Financial Officer
                   and Assistant Secretary

Walter E. Auch, Sr., age 79, was the Chairman and Chief Executive Officer of the
Chicago Board of Options Exchange from 1979 to 1986. Prior to that time, he was 
Executive Vice President, Director and a member of the executive committee of   
Paine Webber. Mr. Auch is a Director of Pimco L.P., Brinson Partners Funds,     
Advisors Series Trust, Smith Barney Concert Series Funds, Smith Barney Trak     
Fund, Nicholas Applegate Funds, Fort Dearborn Fund, Semele Group, Inc. and BSRT 
Management Corp. and a Trustee of Banyan Strategic Realty Trust, Hillsdale      
College and the Arizona Heart Institute. Mr. Auch has been a director of the    
Company since 1988.                                                             

Helge Lund, age 37, is presently Chief Operating Officer of Aker RGI ASA. Prior 
to his appointment Mr. Lund was Executive Vice President of Aker RGI ASA,       
responsible for Investments since January 1999. Mr. Lund is a graduate of the   
Norwegian School of Economics and Business Administration and has an MBA from   
INSEAD in France. He serves as a director for Aker Maritime ASA, Constructor    
Dexion Group PLC, Atlas Stord AS and Polynor Partners AS. Mr. Lund has been a   
director of the Company since March 1999.                                       

Jan Petter Storetvedt, age 44, is presently Senior Vice President, Investments  
Real Estate of Aker RGI ASA. Since March 1997, he has served as chairman of the 
board of Avantor ASA. From December 1991 to March 1997, he served as President, 
Chief Executive Officer and Director of Avantor ASA, a Norwegian publicly traded
real estate company. Mr. Storetvedt has been Chairman of the Board of the       
Company since June 1997.                                                        

Robert M. Ungerleider, age 58, is presently the President of Pilot Books, a book
publisher located in Greenport, New York, and practices law with and is of      
counsel to the firm of Felcher, Fox & Litner P.C., in New York, New York. He has
founded, developed and sold a number of start-up ventures including Verifone    
Finance, an equipment leasing business, SmartPage, a paging service company and 
Financial Risk Underwriting Agency, Inc., an insurance agency specializing in   
financial guarantee transactions. Prior to these endeavors, Mr. Ungerleider     
practiced real estate and corporate law for ten years. Mr. Ungerleider received 
his B.A. Degree from Colgate University and his Law Degree from Columbia        
University Law School. Mr. Ungerleider has been a director of the Company since 
1988.                                                                           

Fred E. Welker, III, age 52, has been the President of Realty Financial         
Advisors, Inc., a real estate investment banking firm, since January 1993. From 
1982 to 1992, Mr. Welker was the Executive Vice President for the Southeast     
Regional Office of Sonnenblick-Goldman Company, a real estate investment banking
firm. From 1981 to 1982, Mr. Welker was Vice President-Joint Ventures for       
American Savings & Loan Association, and from 1976 to 1981 he was a commercial  
loan officer with First Federal of Broward (merged with Glendale Federal). Mr.  
Welker has been a director of the Company since January 1997.                   

Peter J. Henn, age 39, has been President and Chief Executive Officer of the    
Company since March 1999. Prior to his appointment, Mr. Henn was Vice President,
General Counsel and Secretary of the Company since November 1997. Since March   
1994, Mr. Henn has represented certain of the Company's Florida subsidiaries and
provided real estate closing and escrow services to the company as President of 
Harbor Title & Escrow Company. Mr. Henn received his B.A. and M.A. in Economics 
from Florida Atlantic University and his J.D. from the University of Miami      
School of Law.                                                                  

Robert B. Cavoto, age 39, has been Vice President, Chief Financial Officer and  
Assistant Secretary of the Company since November 1997. During 1997, prior to   
this appointment, Mr. Cavoto was a financial consultant to LPI Development,     
Inc., a subsidiary of the Company. From 1991 to 1997, he was an Asset Manager   
with Banyan Management Corp., and was responsible for entitlement, development, 
financing and disposition activities for a                                      

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portfolio of mixed-use and residential land developments. From 1988 to 1991, Mr.
Cavoto was Vice President of finance for a real estate company. Prior to that he
was a manager in KPMG LLP's real estate practice. Mr. Cavoto received his B.S in
accounting from Northern Illinois University and is a Certified Public          
Accountant.                                                                     

ITEM 11. EXECUTIVE COMPENSATION                                                 

A.       DIRECTOR COMPENSATION                                                  

The Directors are paid an annual fee of $15,000, payable quarterly, plus $875   
for each board or audit committee meeting attended in person and $250 an hour   
for any of these meetings attended via telephonic conference call. In addition, 
each Director is reimbursed for out-of-pocket expenses incurred in attending    
meetings of the Board. The three Directors not associated with Aker RGI ASA were
paid an additional fee of $10,000 for serving on the Special Committee that was 
established to evaluate and consider the merger proposal from Holdings (see Note
14 of Notes to the Consolidated Financial Statements).                          

B.       EXECUTIVE COMPENSATION                                                 

Salary Compensation Table. The following information is furnished with respect  
to Executive Officers whose compensation for the year ended December 31, 1999   
exceeded $100,000:                                                              

                                                        [Enlarge/Download Table]

                                                                         Annual Compensation              
                                                            ----------------------------------------------
         Name and Principal Position               Year       Salary           Bonus          All Other   
                                                                                            Compensation  
-----------------------------------------------  ---------  -----------      -----------    --------------
                                                                                                          
Peter J. Henn                                      1999     $212,680          $88,333            N/a      
President and Chief Executive Officer (1)          1998        n/a              n/a              N/a      
                                                   1997        n/a              n/a              N/a      

Robert B. Cavoto,                                  1999     $115,000          $15,000            N/a      
Vice President, Chief Financial Officer and        1998     $105,000          $30,000          $11,078    
Assistant Secretary                                1997          n/a            n/a              n/a      

(1)  Mr. Henn has served as President and Chief Executive Officer of the Company
  since March 1999. During 1998 and 1997, Mr. Henn was compensated under a
   Legal Services Agreement between the Company and the law firm of Peter J.
    Henn, P.A. The Legal Services Agreement provided, among other things, that
   the Company would pay $210,000 for legal services provided to the Company
     for the fiscal year ending December 31, 1999 and that Harbor Title & Escrow
would continue to provide title insurance, as required, at the minimum
title insurance rates allowed under Florida law.                      

C.       EXECUTIVE AND DIRECTORS' STOCK OPTION PLAN                             

On June 25, 1993, the Company's stockholders approved and adopted the 1993      
Executive and Directors' Stock Option Plan (the "Plan"). The Plan grants the    
Board of Directors the authority to issue up to 40,000 shares (adjusted for the 
stock split) of the Company's common stock for stock option awards. The Plan    
consists of an Executive Option Grant Program and a Director Option Grant       
Program. Under the Director Option Grant Program, each Director holding office  
on the tenth business day after adjournment of the annual meeting automatically 
receives an option to acquire 1,000 shares. Options granted vest 50% upon the   
first anniversary of the date of the grant and 50% upon the second anniversary  
of the date of the grant and expire ten years from the date of the grant. The   
exercise price for the options granted in July 1997, January 1997 (1996 Annual  
Meeting), 1995, 1994 and 1993 is $4.50, $7.75, $15.64, $17.19 and $15.64 per    
share, respectively.                                                            

The Board administers the Executive Option Grant Program and has the authority  
to determine, among other things, the individuals to be granted executive       
options, the exercise price at which shares may be acquired, the number of      
shares subject to each option and the exercise period of each option. The Board 
is also authorized to construe and interpret the Executive Option Grant Program 
and to prescribe additional terms and conditions of exercise in option          

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agreements and provide the form of option agreement to be utilized with the     
Executive Option Grant Program. No Director is eligible to receive options under
the Executive Option Grant Program.                                             

Options granted under the Plan are not transferable except by will or by the    
laws of descent and distribution, and are exercisable during an optionee's      
lifetime only by the optionee or the appointed guardian or legal representative 
of the optionee. Upon the: (a) death or permanent and total disability of an    
optionee; or (b) retirement in accord with the Company's retirement practices,  
then any unexercised options to acquire shares will be exercisable at any time  
within one year in the case of (a) and ninety days in the case of (b) (but in no
case beyond the expiration date specified in the Option Agreement). If, while   
unexercised options remain outstanding under the Plan, the Company ceases to be 
a publicly traded company, or if the Company merges with another entity or a    
similar event occurs, all options outstanding under the Plan shall immediately  
become exercisable at that time.                                                

The Plan requires the optionee to pay, at the time of exercise, for all shares  
acquired on exercise in cash, shares or, in the case of the Executive Option    
Grant Program, other forms of consideration acceptable to the Board.            

If the Company declares a stock dividend, splits its stock, combines or         
exchanges its shares, or engages in any other transactions which results in a   
change in capital structure such as a merger, consolidation, dissolution,       
liquidation or similar transaction, the Board may adjust or substitute, as the  
case may be, the number of shares available for options under the Plan, the     
number of shares covered by outstanding options, the exercise price per share of
outstanding options, any target price levels for vesting of the options and any 
other characteristics of the options as the Board deems necessary to equitably  
reflect the effects of those changes on the option holders.                     

Pursuant to the Plan, the Board granted an aggregate 14,440 options thru        
December 31, 1996. Pursuant to the Company's Merger on December 31, 1996 which  
resulted in a change in control (as defined in the Merger agreement),           
substantially all stock options issued to the executive officers and various    
employees of Banyan Management Corp. under the Executive Option Grant Program   
became fully vested and exercisable until December 31, 1997. None of these      
options were exercised and have been cancelled.                                 

The exercise prices as well as the number of shares issuable on any options     
granted prior to the Merger have been adjusted to give effect to the Company's  
25 to 1 reverse stock-split as approved by its stockholders.                    

Options granted after December 31, 1996 (other than which have been described   
above) under the Executive Option Grant Program will be exercisable and vested  
in installments as follows: (1) 33.3% of the number of shares commencing on the 
first anniversary of the date of grant; (ii) an additional 33.3% of the shares  
commencing on the second anniversary of the date of the grant; and (iii) an     
additional 33.4% of shares commencing on the third anniversary of the date of   
grant. Options for all shares as granted under the Director Option Grant Program
will be exercisable and vest as follows: (i) 50.0% of the number of shares      
commencing on the first anniversary of the date of grant; and (ii) an additional
50.0% of the number of shares commencing on the second anniversary of the date  
of grant. The Board is granted discretion to determine the term of each Option  
granted under the Executive Option Grant Program, but in no event will the term 
exceed ten years and one day from the date of grant.                            

There were no stock options granted to or exercised by any present or former    
executive officer during the years ended December 31, 1999 and 1998.            

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ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT        

The following entity is known by the Company (based on filings on Schedule 13d) 
to be the beneficial owner of more than five percent (5%) of the outstanding    
shares of common stock of the Company as of March 31, 2000.                     

                                                        [Enlarge/Download Table]


                                     Name and Address of                   Amount of                Percent       
      Title of Class                   Beneficial Owner              Beneficial Ownership         of Interest     
---------------------------  -------------------------------------  ------------------------  --------------------
                                                                                                                  
Shares of Common              RGI Holdings, Inc. and affiliates            5,057,646                  80%         
Stock, $0.01 par value           2025 First Avenue, Suite 830                                                     
                                  Seattle, Washington 98121                                                       

The following table sets forth the ownership interest and shares owned directly 
or indirectly by the directors and principal officers of the Company as of March
31, 2000:                                                                       

                                                        [Enlarge/Download Table]

                                      Name and Address of                     Amount of                Percent      
      Title of Class                    Beneficial Owner              Beneficial Ownership (1)       of Interest    
----------------------------  -------------------------------------  ----------------------------  -----------------
                                                                                                                    
Shares of Common                     Robert M. Ungerleider                  1,560 Shares             Less than 1%   
Stock, $0.01 par value                                                                                              

Shares of Common                   All Directors and Officers               1,560 Shares             Less than 1%   
Stock, $0.01 par value                  of the Company,                                                             
                                     as a group (7 persons)                                                         

(1)      excludes 8,340 options granted to acquire shares at prices ranging from
$7.74 to $28.125 per share which have vested.                 

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ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        

The following is a summary of certain relationships and other significant       
transactions with related parties during 1999 and outstanding intercompany      
balances as of December 31, 1999 and 1998:                                      

Consulting and Other Fees                                                       

The Company paid the law firm of Peter J. Henn, P.A. $56,875 during the fiscal  
year ending December 31, 1999 for legal services under the Legal Services       
Agreement prior to his appointment as President and Chief Executive Officer.    

Receivables                                                                     

As of December 31, 1999 the Company has included in other assets a $4,757,642   
receivable from Resource Group International, Inc. (RGI), the parent company of 
Holdings, related to a income tax benefit realized from the utilization of the  
Company's 1998 operating loss. The income tax benefit is derived from the       
Company's inclusion in an affiliated consolidated tax group, of which RGI is    
the common parent, pursuant to a new Tax Sharing and Allocation Agreement.      

Payables                                                                        

                                                        [Enlarge/Download Table]


Payables to related parties consist of the following at December 31:                 1999         1998     
                                                                                  -----------  ------------
                                                                                                           
         Mortgage note payable to Holdings with interest payable quarterly at                              
         LIBOR plus 2.5%. Principal payments equal to 20% of Southbridge and 50%                           
         of other collateral sales revenues is payable quarterly with the                                  
         balance due April 1, 2003. The debt is secured by certain real estate                             
         inventory and property. Unpaid interest will be capitalized                                       
         into the principal balance annually.                                     $31,238,050    30,649,872

         Mortgage note payable to Holdings with interest at Prime plus 2% and                              
         partially secured by certain real estate inventory. Interest and                                  
         principal are payable quarterly after certain other debt payments,                                
         provided that a $4.5 million cash reserve remains. Quarterly principal                            
         payments are equal to 80% of the defined net cash flow for Southbridge,                           
         Grand Harbor, and Oak Harbor with the balance due April 1, 2003. Unpaid                           
         interest will be capitalized into the principal                                                   
         balance annually.                                                         38,525,416   35,024,632 

         Unsecured note payable to RGI, Inc. with interest at Prime plus 2%.                               
         Principal and interest is payable on the same terms, but after payments                           
         on the Mortgage note payable discussed immediately above with the                                 
         remainder due April 1, 2003. Unpaid interest will be                                              
         capitalized into the principal balance annually.                          18,503,058    16,821,696

         Unsecured note payable to Holdings, interest at Prime plus 2%.                                    
         Principal and interest due June 1, 1999.                                        -        2,248,278
         Other                                                                        395,437             -
                                                                                  -----------  ------------
                                                                                  $88,661,961    84,744,478
                                                                                  ===========  ============

Holdings has provided to the Company a $5 million credit facility to provide    
sufficient working capital to fund ongoing development, construction and        
operating activities. The credit facility provides for interest at Prime plus   
2%, matures on April 1, 2003 and is secured by certain real estate inventory and
property. The fundings purpose and repayment terms are to be agreed upon prior  
to drawing on this facility.                                                    

Indemnity                                                                       

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Aker RGI ASA, the indirect parent of Holdings, has provided an indemnity, to a  
maximum of $15,000,000, to the bonding company for development bonds at         
Southbridge, of which an aggregate total of approximately $13.5 million was     
outstanding at December 31, 1999.                                               

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 PART IV

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

(a)      Exhibits:                                            

Exhibit No.                                                                     

3.1      --      Amended and Restated Certificate of Incorporation of           
Registrant.(1)                                

3.2      --      Bylaws of Registrant, as amended and restated as of July 1,    
1996.(2)                                      

10.1     --      Edward F. Podboy's Employment Contract dated March 31, 1998.   
(3)                                           

10.2     --      Credit Agreements, Notes and Warrants between Registrant and   
Morgens Waterfall, Vintiadis & Co. Inc.(4)    

10.3     --      Loan Modification Agreement, dated as of May 20, 1996, by and  
            between Registrant and RGI Holdings, Inc. (SoGen Loan).(5)

10.4     --      Loan Modification Agreement, dated as of May 21, 1996, by and  
              between Registrant and RGI Holdings, Inc. (Morgens Loan).(5)

10.5     --      Registration Rights Agreement, dated as of May 21, 1996, by and
between Registrant and RGI Holdings, Inc.(5)  

10.6     --      Second Stipulation and Agreement of Settlement, signed         
            September 17, 1997, In Re: Banyan Mortgage Investment Fund
Shareholders Litigation. (6)                  

21.1     --      Subsidiaries of the Registrant.                                

27.1     --      Financial Data Schedule.                                       

99.1     --      Form of Director Stock Option Agreements dated July 1, 1993,   
July 24, 1994 and July 7, 1995.(7)            

99.2     --      Form of Executive Stock Option Agreements dated July 1, 1993,  
January 12, 1994 and February 8, 1995.(7)     

(1)    Incorporated by reference to the Registrant's Report on Form 10-K for the
year ended December 31, 1996.                                     

(2)    Incorporated by reference to the Registrant's Report on Form 10-Q for the
quarter ended June 30, 1996.                                      

(3)    Incorporated by reference to the Registrant's Report on Form 10-K for the
year ended December 31, 1997.                                     

(4)    Incorporated by reference to Exhibits 10(a) through 10(n) to the         
    Registrant's Report on Form 10-K for the year ended December 31, 1994.

(5)    Incorporated by reference to the Registrant's Report on Form 8-K dated   
May 20, 1996.                                                     

(6)    Incorporated by reference to the Registrant's Report on Form 10-Q for the
quarter ended September 30, 1997.                                 

(7)    Incorporated by reference to the Registrant's Report on Form 10-K for the
year ended December 31, 1995.                                     

(b)      Reports on Form 8-K:                                 

   The following reports on Form 8-K were filed during the quarter ended
December 31,1999:                                                 

                Current Report on Form 8-K filed on October 20, 1999 disclosed
              the sale of the Ashburn Corporate Center to a non-affiliated
third party.                                  

                Current Report on Form 8-K filed on October 25, 1999 disclosed
                the receipt of a proposal for the merger of the Company with a
wholly owned subsidiary of Holdings.          

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SIGNATURES

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

                                     LEGEND PROPERTIES, INC.

                                    By:  /s/ Peter J. Henn
                                                 -----------------------------
                                                 Peter J. Henn, President,
April 14, 2000                                      Chief Executive Officer     

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

By:/s/ Peter J. Henn                              Date:    April 14, 2000       
-----------------------------                                             
Peter J. Henn, President,                                               
Chief Executive Officer                                                 

By:/s/Robert B. Cavoto                            Date:    April 14, 2000       
-----------------------------                                             
Robert B. Cavoto,                                                       
Chief Financial Officer, Vice President                                 
and Assistant Secretary                                                 

By:/s/Walter E. Auch, Sr.                         Date:    April 14, 2000       
-----------------------------                                             
Walter E. Auch, Sr., Director                                           

By:/s/Helge Lund                                  Date:    April 14, 2000       
-----------------------------                                             
Helge Lund, Director                                                    

By:/s/Jan Petter Storetvedt                       Date:    April 14, 2000       
-----------------------------                                             
Jan Petter Storetvedt, Director                                         

By:/s/Robert M. Ungerleider                       Date:    April 14, 2000       
-----------------------------                                             
Robert M. Ungerleider, Director                                         

By:/s/Fred E. Welker, III                         Date:    April 14, 2000       
-----------------------------                                             
Fred E. Welker, III, Director                                           

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                [Download Table]

                                                                        PAGES   
                                                                      ----------
                                                                                
Independent Auditors' Report .....................................           F-2

Consolidated Balance Sheets at December 31, 1999 and 1998.........           F-3

Consolidated Statements of Operations For the Years Ended                       
     December 31, 1999, 1998 and 1997.............................           F-4

Consolidated Statements of Stockholders' Equity (Deficit)                       
     For the Years Ended December 31, 1999, 1998 and 1997.........           F-5

Consolidated Statements of Cash Flows For the Years Ended                       
     December 31, 1999, 1998 and 1997.............................     F-6 - F-7

Notes to Consolidated Financial Statements........................    F-8 - F-25

    All schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule or   
because the information required is included in the consolidated financial      
statements and notes thereto.                                                   

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INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders                                         
Legend Properties, Inc.:                                                        

We have audited the accompanying consolidated balance sheets of Legend          
Properties, Inc. (a subsidiary of RGI Holdings, Inc.) and subsidiaries as of    
December 31, 1999 and 1998, and the related consolidated statements of          
operations, stockholders' equity (deficit) and cash flows for each of the years 
in the three-year period ended December 31, 1999. These consolidated financial  
statements are the responsibility of the management of Legend Properties, Inc.  
Our responsibility is to express an opinion on these consolidated financial     
statements based on our audits.                                                 

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

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the financial position of Legend Properties,  
Inc. and subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the years in the three-year period  
ended December 31, 1999, in conformity with generally accepted accounting       
principles.                                                                     

                        KPMG LLP

West Palm Beach, FL                                                             
April 12, 2000                                                                  

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)
 CONSOLIDATED BALANCE SHEETS

                                                        [Enlarge/Download Table]

                                                                                        December 31,          
--------------------------------------------------------------------------------------------------------------
                                                                                   1999            1998       
--------------------------------------------------------------------------------------------------------------
                                                                                                              
                                   Assets                                                                     

Real estate inventory                                                          $   75,806,841      82,873,914 

Asset held for sale                                                                      --         7,916,175 
Cash and cash equivalents                                                           2,902,359       4,446,864 
Restricted cash and investments                                                    10,602,370      19,017,860 
Accounts and notes receivable                                                       3,106,856       1,491,267 
Property and equipment, net                                                        22,869,703      24,645,281 
Intangibles, net of accumulated amortization of  $1,733,331 in 1999 and                                       
     $1,052,895 in 1998                                                             1,446,007       1,646,542 
Other assets, net of accumulated amortization of $3,808,433 in 1999 and                                       
     $3,646,481 in 1998                                                            10,954,824       5,520,388 
                                                                               -------------------------------

                                                                               $  127,688,960     147,558,291 
                                                                               ===============================

                     Liabilities and Stockholders' Equity                                                     

Notes payable to banks and others                                              $   21,587,213      40,722,737 
Payables to related parties                                                        88,661,961      84,744,478 
Accounts payable                                                                    3,354,368       3,033,693 
Other notes and liabilities                                                        12,785,204      14,443,250 
                                                                               -------------------------------
                                                                                  126,388,746     142,944,158 
                                                                               -------------------------------

Stockholders' equity :                                                                                        
     Common stock, $.01 par value. Authorized 10,000,000 shares; 6,311,678                                    
         shares issued and 6,290,874 shares outstanding at December 31,                                       
         1999 and 1998                                                                 63,117          63,117 
     Additional paid-in capital                                                    44,171,103      44,171,103 
     Accumulated deficit                                                          (42,812,690)    (39,498,771)
     Treasury stock, 20,804 shares at cost at December 31, 1999 and 1998             (121,316)       (121,316)
                                                                               -------------------------------

Total stockholders' equity                                                          1,300,214       4,614,133 
Commitments and contingencies                                                                                 
--------------------------------------------------------------------------------------------------------------

                                                                               $  127,688,960     147,558,291 
==============================================================================================================

See accompanying notes to the consolidated financial statements.                

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)
 CONSOLIDATED STATEMENTS OF OPERATIONS

                                                        [Enlarge/Download Table]

                                                                                 YEARS ENDED DECEMBER 31,                
-------------------------------------------------------------------------------------------------------------------------
                                                                        1999               1998              1997        
-------------------------------------------------------------------------------------------------------------------------
                                                                                                                         
Revenues:                                                                                                                
     Real estate sales                                              $  62,236,880        65,218,900       43,595,507     
     Club operations                                                    7,159,132         5,953,105        5,344,575     
     Patient service                                                    2,755,349         2,600,866        2,718,014     
     Rent                                                                    -                 -           2,186,157     
     Other                                                              2,825,121         1,960,585        1,783,645     
                                                                    -----------------------------------------------------

                          Total revenues                               74,976,482        75,733,456       55,627,898     
                                                                    -----------------------------------------------------

Operating costs and expenses:                                                                                            
     Real estate sales                                                 48,941,809        49,628,187       31,343,932     
     Club operations                                                    7,962,199         7,291,432        6,364,169     
     Patient service                                                    2,074,879         1,919,183        1,521,292     
     Rental operations                                                       -                 -             359,325     
     Other                                                              2,271,702         1,417,681          612,207     
     Selling, general and administrative                               15,323,065        15,414,245       18,265,252     
     Depreciation and amortization                                      1,809,525         2,092,509        1,780,904     
                                                                    -----------------------------------------------------

                         Total operating costs and expenses            78,383,179        77,763,237       60,247,081     
                                                                    -----------------------------------------------------

Operating loss                                                         (3,406,697)       (2,029,781)      (4,619,183)    
                                                                    -----------------------------------------------------

Other income (expenses):                                                                                                 
     Interest income                                                      623,951           944,800        1,386,920     
     Interest income, related party                                          -                 -              73,339     
     Interest expense, including loan cost amortization                (2,249,319)       (5,596,055)      (7,503,319)    
     Interest expense, related party                                   (7,733,829)       (5,853,716)      (4,823,954)    
     Other, net                                                           120,433           397,779          727,575     
                                                                    -----------------------------------------------------

                         Net other expense                             (9,238,764)      (10,107,192)     (10,139,439)    
                                                                    -----------------------------------------------------

Loss before minority interests and income tax benefit                 (12,645,461)      (12,136,973)     (14,758,622)    

Minority interests in loss of consolidated subsidiaries                      -                 -             252,716     
                                                                    -----------------------------------------------------

Loss before income tax benefit                                        (12,645,461)      (12,136,973)     (14,505,906)    

Income tax benefit                                                      9,331,542              -                -        
                                                                    -----------------------------------------------------

Net loss                                                            $  (3,313,919)      (12,136,973)     (14,505,906)    
                                                                    =====================================================

Net loss per share = basic and diluted                              $        (.53)            (1.93)           (2.31)    
                                                                    =====================================================

Weighted average number of common shares outstanding                    6,290,874         6,290,874        6,286,322     
=========================================================================================================================

See accompanying notes to the consolidated financial statements.                

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997

                                                        [Enlarge/Download Table]

                                         COMMON STOCK          ADDITIONAL                                       TOTAL      
                                   -------------------------    PAID-IN      ACCUMULATED       TREASURY     STOCKHOLDERS'  
                                     SHARES       PAR VALUE     CAPITAL        DEFICIT          STOCK      EQUITY (DEFICIT)
                                   ----------    -----------  ------------   ------------   ------------    ------------   
                                                                                                                           
Balances at December 31, 1996       6,277,548    $    62,776  $ 43,793,708   $(12,855,892)  $    (11,316)   $ 30,989,276   

    Purchase of fractional shares        --             --         (22,267)          --             --           (22,267)  
    Repurchase of shares                 --             --            --             --         (110,000)       (110,000)  
    Sale of stock                      34,130            341       399,662           --             --           400,003   
    Net loss                             --             --            --      (14,505,906)          --       (14,505,906)  
                                   ----------    -----------  ------------   ------------   ------------    ------------   

Balances at December 31, 1997       6,311,678         63,117    44,171,103    (27,361,798)      (121,316)     16,751,106   

    Net loss                             --             --            --      (12,136,973)          --       (12,136,973)  
                                   ----------    -----------  ------------   ------------   ------------    ------------   

Balance at December 31, 1998        6,311,678         63,117    44,171,103    (39,498,771)      (121,316)      4,614,133   

       Net loss                          --             --            --       (3,313,919)          --        (3,313,919)  
                                   ----------    -----------  ------------   ------------   ------------    ------------   

Balance at December 31, 1999        6,311,678    $    63,117  $ 44,171,103   $(42,812,690)  $   (121,316)   $  1,300,214   
                                   ==========    ===========  ============   ============   ============    ============   

See accompanying notes to consolidated financial statements.                    

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)
 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                                                          Years Ended December 31,            
----------------------------------------------------------------------------------------------------------------------------- 
                                                                                    1999            1998            1997      
----------------------------------------------------------------------------------------------------------------------------- 
                                                                                                                              
Cash flows from operating activities:                                                                                         
     Net loss                                                                  $ (3,313,919)     (12,136,973)     (14,505,906)
     Adjustments to reconcile net loss to net cash provided by (used in)                                                      
       operating activities:                                                                                                  
              Depreciation and amortization of intangible assets                  1,809,525        2,092,509        1,780,904 
              Loanamortization                                                      266,311          884,958        1,424,591 
              Gain on sale of assets held for sale                                     --               --           (195,076)
              Related party interest expense not paid                             7,513,708        5,853,716        4,721,217 
              Related party interest income not collected                              --               --            (72,537)
              Deferred tax benefit                                               (4,573,900)            --               --   
              Minority interests in loss                                               --               --           (252,716)
              Change in certain assets and liabilities:                                                                       
                    Decrease in real estate inventory                             7,067,073       20,983,245          906,677 
                    Decrease (increase) in assets held for sale                   7,916,175       (7,916,175)       8,301,604 
                    Increase in accounts and notes receivable and other                                                       
                     assets                                                      (2,113,928)      (4,132,798)        (541,903)
                    Increase (decrease) in accounts payable and other notes                                                   
                     And liabilities                                             (1,337,371)       4,662,756       (5,504,042)
                                                                               ------------     ------------     ------------ 

                Net cash provided by (used in) operating activities              13,233,674       10,291,238       (3,937,187)
                                                                               ------------     ------------     ------------ 

Cash flows from investing activities:                                                                                         
     Decrease (increase) in restricted cash and investments                       8,415,490       (3,787,322)       7,260,767 
     Purchase of property and equipment                                            (703,209)        (791,440)      (6,297,341)
     Loans to related parties                                                          --               --            (20,000)
     Collection of loans to related parties                                            --               --            398,434 
     Proceeds from sale of property and equipment                                   830,062             --               --   
     Proceeds from assets held for sale                                                --               --         19,436,029 
                                                                               ------------     ------------     ------------ 

                Net cash provided by (used in) investing activities               8,542,343       (4,578,762)      20,777,889 
                                                                               ------------     ------------     ------------ 

Cash flows from financing activities:                                                                                         
     Proceeds from notes payable to bank and others                              14,874,271       21,569,532       19,653,062 
     Repayment of notes payable to bank and others                              (34,009,795)     (41,258,127)     (45,942,347)
     Proceeds from loans from related parties                                     3,750,000        6,000,000       20,702,720 
     Repayment of loans from related parties                                     (7,741,661)          (3,165)        (139,107)
     Payment of loan fees                                                          (193,337)        (306,533)        (179,983)
     Repurchase of common and fractional shares                                        --               --           (132,267)
     Sale of common shares                                                             --               --            400,003 
                                                                               ------------     ------------     ------------ 

                Net cash used in financing activities                           (23,320,522)     (13,998,293)      (5,637,919)
                                                                               ------------     ------------     ------------ 

Net (decrease) increase  in cash and cash equivalents                            (1,544,505)      (8,285,817)      11,202,783 

Cash and cash equivalents at beginning of year                                    4,446,864       12,732,681        1,529,898 
                                                                               ------------     ------------     ------------ 

Cash and cash equivalents at end of year                                       $  2,902,359        4,446,864       12,732,681 
                                                                               ============     ============     ============ 

                                                   (Continued)

See accompanying notes to consolidated financial statements.                    

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)
 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                                                  Years Ended December 31,         
-------------------------------------------------------------------------------------------------------------------
                                                                                1999         1998          1997    
-------------------------------------------------------------------------------------------------------------------
                                                                                                                   
Supplemental Disclosure of Cash Flow Information -                                                                 
     Cash paid during the year for interest, net of amount capitalized of                                          
        $950,124 in 1999, $1,137,447 in 1998 and $903,978 in 1997            $1,282,799     4,699,226     5,811,516
                                                                             ==========    ==========    ==========

Supplemental Schedule of Noncash Investing and Financing Transactions:                                             
     Purchase of minority interest in exchange for cancellation of a note                                          
         receivable and accrued interest                                     $     --            --       1,681,584
                                                                                                         ==========

===================================================================================================================

See accompanying notes to consolidated financial statements.                    

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                          

DESCRIPTION OF BUSINESS                                       

   Legend Properties, Inc. (the Company or Legend) formerly known as
        Banyan Mortgage Investment Fund (Banyan), is the surviving corporation
        from the December 31, 1996 merger (the Merger) with RGI U.S. Holdings,
Inc. (RGI/US) (see Note 2). Prior to the Merger, RGI/US was a 
 wholly-owned subsidiary of RGI Holdings, Inc. (Holdings). As of
  December 31, 1999, Holdings owns approximately 80 percent of the
outstanding common shares of Legend.                          

         As of December 31, 1999, Legend owns, operates and develops real estate
through its wholly owned subsidiaries as follows:             

                -        Grand Harbor Associates, Inc. (GHA) was formed as a
                    holding company in 1991 and owns a 100 percent
                      interest in Grand Harbor Property Holdings, Inc.
                     (GHPH) and a 100 percent interest in Oak Harbor
                          Property Holdings, Inc., Quality Life Services, Inc.
                           and Quality Life Services, Ltd. (collectively, OHPH).
                         GHA's original 45 percent interest was increased by
                           acquiring an additional 45 percent on January 2, 1996
                      and the remaining 10 percent interest on July 2,
1997.                     

                       GHPH includes nine corporations and seven limited
                        partnerships and was formed in 1991 to acquire and
                      develop a 772 acre residential golf community in
                     Indian River County, Florida. Grand Harbor (the
                       development) is planned for 1,196 mid to high-end
                     residential units. The development has numerous
                        amenities and facilities, including golf and beach
                          clubs, two 18-hole championship golf courses, tennis
courts and a marina.      

                    OHPH includes eight corporations and a limited
                         partnership and was formed in 1993 to develop a 116
                      acre senior retirement community in Indian River
                      County, Florida, with an on-site assisted living
                    facility. In 1994, an off-site skilled nursing
facility was acquired.    

                  -        VMIF/Anden Southbridge Venture and VMIF/Anden Wayside
                         Venture (for financial reporting purposes, acquired
                     on December 31, 1996 as part of the merger with
                           Banyan (see Note 2)), were formed in 1991 to hold and
                      develop Southbridge, a 2,685 acre master planned
                          community in Prince William County, Virginia planned
                          for approximately 5,400 residential units, 4,000,000
                    square feet of non-residential uses (including
                    office, R&D, commercial, industrial, and other
               similar uses) and an 18 hole golf course.

        During 1999, 1998 and 1997, Legend disposed of the following operating
and development properties:                                   

              -        Ashburn Corporate Center, LC (ACCLC) an 82% owned
                      subsidiary, was formed in March 1998 to hold and
                      develop the Ashburn Corporate Center, a 116-acre
                     commercial business park development project in
                     Loudoun County, Virginia planned for office and
                       flex/tech uses. During 1999, the Company sold the
                 Ashburn Corporate Center for $15.2 million.

        -        VMIF Charles County Venture, a wholly owned
                    subsidiary, (for financial reporting purposes,
                         acquired on December 31, 1996 as part of the merger
                          with Banyan (see Note 2)) was formed in 1991 to hold
                        and develop Chapman's Landing, a 2,227 acre master
                    planned community in Charles County, Maryland.
                        Chapman's Landing was sold during October 1998 for
$28.5 million.            

       -        BMIF Monterey County Corp., a wholly owned
                    subsidiary, (for financial reporting purposes,
                         acquired on December 31, 1996 as part of the merger
with Banyan (see          

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

                        Note 2)) was formed to hold and develop a 565-acre
                         land parcel in Monterey County, California known as
                      the Laguna Seca Ranch (Laguna). During 1997, the
            Company sold Laguna for $12.8 million.

                 -        American Property Investments, Inc. (API) was formed
                  for the purpose of acquiring, renovating and
                         operating the Lynnwood Shopping Center in Lynnwood,
                         Washington (acquired in November 1987). In November
                       1997, API sold Lynnwood Center for $20.1 million.

BASIS OF PRESENTATION                                         

      The consolidated financial statements include the accounts of Legend
 and its wholly and majority owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation.                                                

USE OF ESTIMATES                                              

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

The Company computes cost of sales and relieves property under
       development (a component of real estate inventory) based on the ratio
of current year and estimated future costs to current year and
estimated future sales. Actual results could differ from these
estimates.                                                    

REAL ESTATE INVENTORY                                         

   Real estate inventory is recorded at cost, reduced for impairment
  losses, if any. Inventoried costs consist of land (including any
related legal, engineering and other acquisition costs) common
 improvements, amenities, construction in progress and completed
         residential units. Interest, real estate taxes and other carrying costs
      are capitalized only for discrete parcels or units undergoing active
         development. The costs of common improvements are allocated to discrete
parcels or units based on relative sales values or specific   
identification.                                               

    The Company reviews its real estate inventory for impairment where
         events or changes in circumstances indicate that the carrying amount of
        the assets may not be recoverable. Recoverability of assets to be held
      and used is measured by comparing the carrying amount of an asset to
      future or anticipated net cash flows generated by the asset. If such
   assets are deemed to be impaired, the impairment is recognized by
        measuring the difference between the carrying amount of the assets and
its fair value.                                               

ASSETS HELD FOR SALE                                          

       Assets held for sale are reported at the lower of the carrying amount
or fair value less costs to sell.                             

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

CASH AND CASH EQUIVALENTS                                     

       Cash and cash equivalents consist of cash, demand deposits with banks
      and highly liquid investments with maturity dates of three months or
less at the date of acquisition.                              

RESTRICTED CASH AND INVESTMENTS                               

        Restricted cash includes customer deposits and various escrow accounts
        with local governments and others related to the completion of certain
         development of $5,168,410 and $7,007,417, and cash held in bank as loan
        collateral of $1,057,046 and $7,341,731 at December 31, 1999 and 1998,
respectively.                                                 

         Restricted investments include an irrevocable trust consisting of three
       annuities totaling $4,376,914 and $4,668,712 at December 31, 1999 and
        1998, respectively, which is solely to provide security for payment on
   a note payable. The annuity contracts will fully satisfy the note
through annual principal and interest payments.               

PROPERTY AND EQUIPMENT                                        

      Property and equipment are stated at cost. Significant additions and
         improvements are capitalized while repairs and maintenance are expensed
as incurred. Interest charges related to assets developed or  
constructed for use in operations are capitalized during the  
       construction period. Depreciation and amortization are provided using
     the straight-line method over the following estimated useful lives:

Buildings and improvements         31 - 39 years
Furniture and fixtures               3 - 7 years
Land Improvements                       15 years
Marina                                  15 years

INTANGIBLES                                                   

     Intangibles include goodwill and a non-compete agreement. Goodwill,
      which represents the excess of the purchase price over fair value of
      net assets acquired, is amortized using the straight-line method for
       periods from thirteen and a half to fifteen years. The recoverability
    of goodwill is assessed by comparing estimated undiscounted future
    operating cash flows over the remaining amortization period to the
     current net asset balance. If impairment is identified, any loss is
    measured based on projected discounted future operating cash flows
      using a discount rate reflecting Legend's average cost of funds. The
        non-compete agreement is amortized using the straight-line method over
a period of fifteen years, the term of the agreement.         

OTHER ASSETS                                                  

        Included among other assets are deferred loan costs that are amortized
   using the straight-line method over the term of the related debt.

STOCK-BASED COMPENSATION                                      

    In October 1995, the FASB issued Statement of Financial Accounting
         Standards No. 123, "Accounting for Stock Based Compensation" (Statement
   123). This standard allows the use of either the fair value based
       method described in Statement 123 or the intrinsic value based method
  prescribed by APB Opinion No. 25, Accounting for Stock Issued to
       Employees." ("APB 25") The Company has elected to continue accounting
       for stock based compensation under the APB 25 method and disclose the
pro forma impact of Statement 123.                            

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

DEPOSITS                                                      

    Included in other liabilities are customer deposits on real estate
    sales, rental and club memberships of $6,667,812 and $7,765,853 at
     December 31, 1999 and 1998, respectively. The real estate sales and
  rental deposits are held in restricted bank accounts, which were
        $3,719,814 and $5,470,785 at December 31, 1999 and 1998, respectively.
         Among these are certain associate member deposits that will be refunded
    at the end of the related term or upon cancellation by the member.

REVENUE RECOGNITION                                           

       Revenues on retail sales of real estate are recorded upon the closing
and transfer of title to the buyer, whereas rental revenue is 
         recognized over the respective tenant lease terms (1 to 30 years) using
    the straight-line method. Sales of equity memberships in the Grand
      Harbor Golf and Beach Club (Club) are included in real estate sales.
         Club assets at Grand Harbor are an amenity which is charged to the cost
      of real estate sales sold based on real estate sold. Membership dues
  for Grand Harbor are billed on an annual basis and recognized as
revenue ratably over the year.                                

INCOME TAXES                                                  

       The Company utilizes the asset and liability method of accounting for
     income taxes. Under the asset and liability method, deferred income
        taxes are recognized for the tax consequences of temporary differences
   by applying enacted statutory rates applicable to future years to
      differences between the financial statement carrying amounts and the
         tax basis of existing assets and liabilities. Changes in tax rates that
         effect deferred tax assets and liabilities are taken into income during
         the period that includes the enactment date. Deferred income tax assets
are reduced by a valuation allowance when, in the opinion of  
   management, it is likely that some portion or all of the deferred
income tax assets will not be realized.                       

For tax purposes, the Company is included in an affiliated    
       consolidated tax group, of which Resource Group International Inc. is
 the common parent, pursuant to a new Tax Sharing and Allocation
Agreement.                                                    

ADVERTISING COSTS                                             

        Costs of advertising, promotion and marketing are generally charged to
 operations as incurred. These expenses were $2,664,880 in 1999,
$2,431,072 in 1998 and $2,395,134 in 1997.                    

SEGMENT INFORMATION                                           

     The company adopted Statement of Financial Accounting Standards No.
131, "Disclosures about Segments of an Enterprise and Related 
 Information" (SFAS No. 131) in 1998. This statement establishes
        standards for the reporting of information about operating segments in
     annual and interim financial statements and requires restatement of
         prior year information. Operating segments are defined as components of
     an enterprise for which separate financial information is available
         that is evaluated regularly by the chief operating decision maker(s) in
       deciding how to allocate resources and in assessing performance. SFAS
No. 131 also requires disclosures about products and services,
        geographic areas and major customers. The adoption of SFAS No. 131 did
       not affect results of operations or financial position but did affect
 the disclosure of segment information, as presented in Note 14.

NEW ACCOUNTING PRONOUNCEMENTS                                 

 In June 1998, the FASB issued Statement of Financial Accounting
       Standards No. 133, "Accounting for Derivative Instruments and Hedging
         Activities" ("Statement 133"). The effective date for Statement 133 was
 delayed by Statement of Financial Accounting Standards No. 137,
 "Accounting for Derivative Instruments and Hedging Activities -
      deferral of the effective date of FASB No. 133"("Statement 137"), to
       fiscal years beginning after June 15, 2000. Statement 133 establishes
accounting and reporting standards for derivative instruments,
       including certain derivative instruments embedded in other contracts,
      and for hedging activities. It requires that an entity recognize all
 derivatives as either assets or liabilities in the statement of
       financial position and measure those instruments at fair value. It is
    currently anticipated that the Company will adopt Statement 133 on
     January 1, 2001, and that the statement will not have a significant
financial statement impact upon adoption.                     

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

RECLASSIFICATIONS                                             

       Certain amounts in prior years consolidated financial statements have
been reclassified to conform to the 1999 presentation.        

(2)      LIQUIDITY                                                              

    As of December 31, 1999, the Company's debt obligations, including
  payables to related parties of $88,661,961 (see Note 6), totaled
        $110,249,174 of which $5,803,953 matures by December 31, 2000. None of
     these maturities relate to payables to Holdings. In addition to the
 debt maturities under existing financings, the Company requires
       additional financing to advance its business plan. As of December 31,
      1999, the Company had $2,902,359 of cash and cash equivalents, which
will not be sufficient to fund these obligations.             

       The company expects to meet its existing debt obligations that mature
   during 2000 by the renewal and extension of existing construction
  lines, and internally generated funds from real estate sales and
       operations. Based on alternatives available, management believes that
         sufficient funds will be available to meet its obligations during 2000.
   If sufficient funds are not available from the above sources, the
       Company anticipates delaying certain interest payments to Holdings as
       allowed under the debt agreements. The Company also has available, if
         needed, a $5 million credit facility from Holdings, which was unused at
December 31, 1999.                                            

(3)      ACQUISITIONS                                                           

     Certain business combinations consummated during 1997 and 1996 were
    accounted for under the purchase method of accounting, wherein the
     purchase price was allocated to the assets acquired and liabilities
      assumed based upon their relative fair values. Results of operations
     for these acquired companies have been included in the consolidated
financial statements from the acquisition dates.              

BANYAN MORTGAGE INVESTMENT FUND                               

       On April 12, 1996, an Agreement and Plan of Merger was executed among
RGI/US, Holdings and Banyan.                                  

      Effective December 31, 1996, RGI/US was merged with and into Banyan.
   Banyan's certificate of incorporation was amended to convert each
         twenty-five shares of Banyan's issued and outstanding common stock into
     one issued and outstanding share (Reverse Split). Additionally, the
    name of Banyan was changed to Legend Properties, Inc. After giving
    effect to the Reserve Split, all outstanding shares of RGI/US were
converted into 4,386,986 shares of Banyan's common stock. For 
      accounting purposes, the merger was treated as a recapitalization of
RGI/US, with RGI/US as the acquirer of Banyan for $22,175,403.

         GRAND HARBOR PROPERTY HOLDINGS, INC., AND OAK HARBOR PROPERTY HOLDINGS,
INC.                                                          

         On January 2, 1996, GHA, a 45 percent general partner in GHPH and OHPH,
         purchased Southmortgage Finance Co., a holding company for certain bank
        debt (the proceeds of which were loaned to GHPH), and an additional 45
     percent interest in GHPH, OHPH and Harbor Title and Escrow Co. Ltd.
     (collectively, the Acquired Companies). Harbor Title and Escrow Co.
        Ltd. provides title and escrow service for GHPH and OHPH. The Acquired
     Companies were purchased from Andlinger Properties Capital L.P. for
  cash consideration of $52,237 and a promissory note of $996,220.

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

     In July 1997, GHA acquired the remaining 10 percent of the Acquired
    Companies. The Acquired Companies were purchased from Grand Harbor
 Development Company (GHDC), a corporation majority owned by Don
   Proctor, in exchange for the cancellation of a note receivable of
         $1,462,770 plus accrued interest of $218,814, payable to GHA from GHDC.
 Don Proctor is the majority shareholder of Proctor Construction
     Company, which has an exclusive contract to provide development and
       construction services at Grand Harbor and Oak Harbor. Mr. Proctor was
an officer of GHPH until his resignation in June 1997.        

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

(4)      REAL ESTATE INVENTORY AND ASSET HELD FOR SALE                          

REAL ESTATE INVENTORY                                         

        Real estate inventory consisted of the following at December 31, 1999:

                                                        [Enlarge/Download Table]

                                            Initial cost to Legend            Cost Adjustments     
                                          ---------------------------     -------------------------
    Name, approximate size       Encum-                 Building and                  Building and 
       Type and location        brances      Land       Improvements         Land     Improvements 
-----------------------------  ---------  -----------   -------------     ---------   -------------
                                                                                                   
Grand Harbor, 300-acre         Note 5                                                              
residential development in     (G-J)                                                               
Vero Beach, FL                            $ 9,059,365         -              -          16,642,981 

Oak Harbor, 100-acre           Note 5                                                              
residential development in     (C-F)                                                               
Vero Beach, FL                              3,494,372         -              -           9,687,223 

Southbridge, 2,300-acre        Note 5(A)                                                           
mixed use land development in  Note 6                                                              
Prince William County, VA      (A-B)       20,397,886        7,146,670       -           9,497,544 
                                          -------------------------------------------------------- 

                                          $32,951,623        7,146,670       -          35,827,748 
                                          ======================================================== 

                                                        [Enlarge/Download Table]

                                                             Valuation                                               
                                                           adjustment and                                            
                                             Building       accumulated                                              
                                               And          depreciation                       Date of        Date   
       Description             Land        improvements   and amortization     Total (a)     Construction   Acquired 
---------------------------------------------------------------------------------------------------------------------
                                                                                                                     
Grand Harbor, 300-acre                                                                                               
residential development                                                                                              
in Vero Beach, FL           $ 9,059,365     16,642,981        (119,200)       25,583,146          (b)         03/91  

Oak Harbor, 100-acre                                                                                                 
residential development                                                                                              
in Vero Beach, FL             3,494,372      9,687,223            -           13,181,595          (b)         05/91  

Southbridge, 2300-acre                                                                                               
mixed use land                                                                                                       
development in Prince                                                                                                
 William County, VA          20,397,886     16,644,214            -           37,042,100          (b)         12/96  
                           --------------------------------------------------------------                            
                            $32,951,623     42,974,418        (119,200)       75,806,841                             
                           ==============================================================                            

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

      a)       Reconciliation of real estate inventory for the years ended
December 31:                                

                                                        [Enlarge/Download Table]

                                                      1999              1998               1997      
-----------------------------------------------------------------------------------------------------
                                                                                                     
Balance at beginning of year                     $  82,873,914       103,857,159       128,834,222   
-----------------------------------------------------------------------------------------------------
Reallocation of purchase price Banyan                     -                  -             415,869   
Net dispositions through sale                      (33,052,315)      (47,425,324)      (47,784,281)  
Acquisitions                                              -                  -           1,260,019   
Net additions                                       25,985,242        26,442,079        21,250,530   
Valuation adjustment                                      -                  -            (119,200)  
-----------------------------------------------------------------------------------------------------

Balance at end of year                           $  75,806,841        82,873,914       103,857,159   
=====================================================================================================

        b)       Properties are currently at various stages of development and
             entitlement. The build-out of the projects is expected to
                  continue for periods ranging from 5-20 years under the current
development plans.                          

ASSET HELD FOR SALE                                           

         At December 31, 1998, Asset Held for Sale represents the carrying value
        of the Ashburn Corporate Center. On April 19, 1999, Ashburn Front Five
    LLC, a wholly owned subsidiary of the Company, acquired the second
        parcel of the Ashburn Corporate Center which comprises nearly 28 acres
        for an approximate purchase price of $4,300,000. In Management's view,
      the acquisition of the additional parcel was necessary to facilitate
the disposition of the entire Ashburn Corporate Center.       

    In April 1999, the Company executed a contract for the sale of the
    entire project to an unrelated third party. In accordance with the
     contract, the purchaser deposited a $100,000 non-refundable deposit
        into escrow. Subsequently, the purchaser was unwilling to move forward
      with the closing so in June 1999 the Company, in accordance with the
      contract, terminated the contract and received the $100,000 deposit.
        The deposit was recorded as other income in the Company's consolidated
financial statements.                                         

On September 27, 1999, the Company, through its majority owned
         subsidiaries, Ashburn Corporate Center, LC and Ashburn Front Five, LLC,
        sold the land and related improvements of the Ashburn Corporate Center
to Catapult Ventures LLC, an unrelated third party.           

       The sales price of the property was $15,150,000 (before closing costs
        of approximately $790,000.) The Company used a portion of the proceeds
     to repay existing mortgage notes of $5,940,000 (see Note 6 (K)) and
       related party debts of $3,750,000 on the credit facility advance from
        Holdings and $1,743,682 on additional Holdings debt. The sale resulted
         in a gain for financial reporting purposes of approximately $2,000,000.

F-15

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

(5)      PROPERTY AND EQUIPMENT                                                 

        Property and equipment are stated at cost and consist of the following
at December 31:                                               

                                                        [Enlarge/Download Table]

                                                                1999          1998       
-----------------------------------------------------------------------------------------
                                                                                         
Marina                                                    $    2,683,471       2,683,471 
Buildings and improvements                                    14,124,773      14,602,202 
Furniture, fixtures and equipment                              7,433,063       7,225,351 
Depreciable land improvements                                  2,014,677       2,014,677 
-----------------------------------------------------------------------------------------

                                                              26,255,984      26,525,701 

Less accumulated depreciation and amortization                 8,129,706       6,623,845 
-----------------------------------------------------------------------------------------

                                                              18,126,278      19,901,856 

Land (including golf course land)                              4,743,425       4,743,425 
-----------------------------------------------------------------------------------------

                                                          $   22,869,703      24,645,281 
=========================================================================================

(6)      NOTES PAYABLE TO BANKS AND OTHERS                                      

         Notes payable to banks and others consists of the following at December
31:                                                           

                                                        [Enlarge/Download Table]

(Reference to note 3)                                                        1999           1998     
-----------------------------------------------------------------------------------------------------
                                                                                                     
(A)      Note payable to others, interest only payable monthly at                                    
         12 percent, principal due April 20, 1999, secured by                                        
         certain real estate inventory.                                  $       -          2,950,000

(B)      Note payable to bank, interest payable monthly at prime                                     
         rate plus 1.0 percent (9.50 percent at December 31,                                         
         1999); principal is due during 2000.                                 259,521            -   

(C)      Note payable to others, interest at 6.34 percent, due in                                    
         annual installments of $600,000, including interest                                         
         through July 1, 2009.  Secured by annuity contracts.               4,345,780       4,650,912

(D)      Notes payable to banks, interest payable monthly at the                                     
         banks' cost of funds rate (not to exceed the LIBOR rate                                     
         plus .50 percent) plus 2.25 percent (8.7113 percent at                                      
         December 31, 1999); principal payments of $786,597,                                         
         $969,000 and $692,712 due in 2000, 2001 and 2002,                                           
         respectively.  Secured by second mortgages on certain              2,448,309       3,048,309
         real estate inventory and property.                                                         

(E)      Notes payable to banks, interest payable monthly at                                         
         LIBOR plus 2.50 percent and prime rate plus 1.0 percent                                     
         (8.66 percent to 9.50 percent at December 31, 1999);                                        
         principal payments of $887,361, $160,143, $177,519 and                                      
         $3,326,698 due in 2000, 2001, 2002 and 2003,                                                
         respectively. Secured                                                                       
         by first mortgages on certain real estate inventory,               4,551,721      11,433,815
         certain property and equipment.                                                             

(F)      Construction revolving line of credit, interest payable                                     
         monthly at the prime rate plus 1 percent (9.50 percent                                      
         at December 31, 1999), due December 2000. Secured by                                        
         first mortgages on certain real estate inventory,                                           
         certain property and equipment.  Total advances are not              845,163       1,287,663
         to exceed $16,000,000.                                                                      

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

                                                        [Enlarge/Download Table]
                                                                                                              
         (G)      Notes payable to bank, interest payable monthly at the                                      
                  bank's cost of funds rate (not to exceed the LIBOR rate                                     
                  plus .50 percent) plus 2.25 percent (8.7113 percent at                                      
                  December 31, 1999); principal payments of $1,283,395,                                       
                  $1,581,000 and $1,207,288 due in 2000, 2001 and 2002,                                       
                  respectively.  Secured by first and second mortgages on            4,071,683       4,741,701
                  certain real estate inventory.                                                              

         (H)      Notes payable to banks, interest payable monthly at the                                     
                  prime rate (8.50 percent at December 31, 1999);                                             
                  principal is due November 2000. Secured by a first                                          
                  mortgage on                                                                                 
                  certain real estate inventory.                                       371,698       1,732,588

         (I)      Construction revolving lines of credit payable to banks:                                    
                  principal payments of $1,022,549 and $3,611,986 due                                         
                  October 2000 and December 2001, respectively. Interest                                      
                  payable monthly at the prime rate (8.50 percent at                                          
                  December 31, 1999). Secured by a first mortgage on                 4,634,535       4,743,556
                  certain property.  Total advances are not to exceed                                         
                  $16,000,000.                                                                                

         (J)      Notes payable to others, interest at 7.50 percent to 9.0                                    
                  percent; principal and interest due during 1999.                                            
                  secured by a first mortgage on certain real estate                      -             91,000
                  inventory.                                                                                  

         (K)      Note payable to others, interest due monthly at 18%,                                        
                  principal due September 6, 1999. Secured by a first                                         
                  mortgage on                                                                                 
                  assets held for sale.                                                   -          5,940,000

         (L)      Other                                                                 58,803         103,193
                                                                                   -----------      ----------
                                                                                   $21,587,213      40,722,737
--------------------------------------------------------------------------------------------------------------

        Scheduled principal maturities of notes payable to banks and others at
December 31, 1999 are as follows:                             

                                                                [Download Table]
                                               
2000                              $  5,803,953 
2001                                 6,696,620 
2002                                 2,447,661 
2003                                 3,719,841 
2004                                   414,927 
Thereafter                           2,504,211 
-----------------------------------------------
                                  $ 21,587,213 
===============================================

       In conjunction with the acquisition of Royal Palm Convalescent Center
by OHPH in June 1994, an irrevocable trust consisting of three
      annuities was established for the sole purpose of providing security
       for payments due on the note payable to others (see (C)). The annuity
      contracts totaled $4,225,298 and $4,512,127 at December 31, 1999 and
      1998, respectively, plus accrued interest receivable of $151,616 and
    $156,585, and will fully satisfy the annual principal and interest
         payments of $600,000 under the note payable through maturity on July 1,
2009.                                                         

F-17

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

(7)   RELATED PARTY TRANSACTIONS                                          

  The following is a summary of other significant transactions and
    accounts with related parties during 1999, 1998 and 1997 and as of
December 31, 1999 and 1998:                                   

RECEIVABLES                                                   

    As of December 31, 1999 the Company has included in other assets a
       $4,757,642 receivable from RGI, Inc., the parent company of Holdings,
   related to the utilization of the benefit of a deferred tax asset
    recorded by the Company. The benefit is derived from the Company's
inclusion in RGI, Inc.'s consolidated tax return.             

PAYABLES                                                      

      Payables to related parties consist of the following at December 31:

                                                        [Enlarge/Download Table]

                                                                             1999             1998   
                                                                         ------------      ----------
                                                                                                     
(Reference to note 3)                                                                                
(A)   Mortgage note payable to Holdings with interest payable                                        
      quarterly at LIBOR plus 2.5%. Principal payments equal                                         
      to 20% of Southbridge and 50% of other collateral sales                                        
      revenues is payable quarterly with the balance due April                                       
      1, 2003. The debt is secured by certain real estate                                            
      inventory and property.  Unpaid interest will be capitalized                                   
      into the principal balance annually.                               $ 31,238,050      30,649,872

(B)   Mortgage note payable to Holdings with interest at                                             
      Prime plus 2% and secured by certain real estate                                               
      inventory.  Interest and principal are payable                                                 
      quarterly after certain other debt payments                                                    
      provided that a $4.5 million cash reserve                                                      
      remains.  Quarterly principal payments are equal                                               
      to 80% of the defined net cash flow for                                                        
      Southbridge, Grand Harbor, and Oak Harbor with                                                 
      the balance due April 1, 2003.  Unpaid interest                                                
      will be capitalized into the principal balance                       38,525,416      35,024,632
      annually.                                                                                      

(C)   Unsecured note payable to RGI, Inc. with interest at                                           
      Prime plus 2%. Principal and interest is payable on the                                        
      same terms, but after payments on the Mortgage note                                            
      payable discussed immediately above with the remainder                                         
      due April 1, 2003. Unpaid interest will be capitalized                                         
      into the principal                                                                             
      balance annually.                                                    18,503,058      16,821,696

(D)   Unsecured note payable to Holdings, interest at Prime                                          
      plus 2%.  Principal and interest due June 1, 1999.                         -          2,248,278

(E)      Other                                                                395,437            -   
                                                                         ------------      ----------

                                                                         $ 88,661,961      84,744,478
=====================================================================================================

     The entire $88,661,961 related party payable (principal and accrued
interest) is due on April 1, 2003.                            

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

      Holdings has provided to the Company a $5 million credit facility to
 provide sufficient working capital to fund ongoing development,
         construction and operating activities. The credit facility provides for
       interest at Prime plus 2%, matures on April 1, 2003 and is secured by
 certain real estate inventory and property. Funding purpose and
repayment terms are to be agreed upon prior to drawing on this
facility.                                                     

       On May 18, 1999, the Company borrowed $3,750,000 under the $5 million
       credit facility with Holdings. Funds from the $3,750,000 advance were
     used to repay a $2,248,279 unsecured note payable to Holdings which
     matured on June 1, 1999 and to repay a portion of a $2,950,000 note
payable to an unrelated third party.                          

         On September 29, 1999, the $3,750,000 advance plus accrued interest was
 repaid to Holdings. In addition, the Company made an additional
    $1,743,682 principal payment to Holdings pursuant to the Company's
         agreement with Holdings. Funds for the repayments were generated by the
sale of the Ashburn Corporate Center, as discussed in Note 3. 

INDEMNITY                                                     

Aker RGI ASA, the indirect parent of Holdings, has provided an
    indemnity, to a maximum of $15,000,000, to the bonding company for
  development bonds at Southbridge, of which an aggregate total of
 approximately $13,500,000 was outstanding at December 31, 1999.

CONSTRUCTION AGREEMENT                                        

    Prior to December 31, 1999, Proctor Construction Company (Proctor)
        provided all development and construction services at Grand Harbor and
         Oak Harbor since Legend acquired the projects. Donald C. Proctor is the
        majority shareholder of Proctor, and an affiliate of Mr. Proctor owned
         10 percent of GHPH and OHPH (the corporations that own Grand Harbor and
        Oak Harbor, see Note 2). This exclusive contract was effective through
         December 31, 1999, with fees equal to the cost of the work, a 7 percent
       overhead charge and a 5 percent profit fee, half of which was payable
         to GHPH and OHPH. There can be no assurance that Legend purchased these
services at prevailing market rates.                          

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

(8)     INCOME TAXES                                                          

    Income tax benefit attributable to loss from continuing operations
consists of:                                                  

                                                                [Download Table]

                                     Current       Deferred       Total     
                                                                            
Year ended December 31, 1999:                                               
       US federal                 $(4,757,642)    (4,573,900)    (9,331,542)
       State and local                   -              -              -    

Year ended December 31, 1998:                                               
       US federal                        -              -              -    
       State and local                   -              -              -    
                                  ============    ===========    ===========

    Income benefit attributable to loss from continuing operations was
      $9,331,542 and $0 for the years ended December 31, 1999 and December
  31, 1998, respectively, and differed from the amount computed by
        applying the US federal income tax rate of 34 percent to pretax income
from continuing operations as a result of the following:      

                                                        [Enlarge/Download Table]

                                                                       1999          1998    
                                                                                             
Computed "expected" tax benefit                                                              
Increase (reduction) in income taxes                               $(4,299,457)   (4,126,571)
    Resulting from:                                                                          
    State and local income taxes, net of                                                     
        Federal income tax benefit                                    (493,173)     (473,341)
    Change in the beginning-of-the-year Balance of the valuation                             
        allowance For deferred tax assets allocated To income tax                            
        benefit                                                    (12,247,900)    3,711,000 
    Change in Valuation allowance due to                                                     
        Election to treat loss carryover as                                                  
        Expiring                                                    12,451,570          -    
    Amount attributable to benefit received                                                  
        Due to prior year loss utilized by                                                   
        Parent company                                              (4,757,642)         -    
    Permanent items, primarily due                                                           
        Due to meals and entertainment, etc.                              -          467,212 
    Other                                                               15,060       421,700 
                                                                   ------------  ------------
    Total                                                          $(9,331,542)         -    
                                                                   ============  ============

        The tax effects of temporary differences that give rise to significant
     portions of the deferred tax assets and deferred tax liabilities at
December 31, 1999 and 1998 are presented below:               

                                                                [Download Table]

                                                        1999         1998   
                                                                            
Deferred tax assets:                                                        
    Real estate inventory and assets held for sale  $20,492,000   20,488,000
    Deferred income                                     245,000      270,000
    Net operating loss carryforwards                 12,685,000   20,324,000
    Organization and loan fees                          771,000      849,000
    Other                                                 -          176,000
                                                    -----------  -----------
Total gross deferred tax assets                      34,193,000   42,107,000
Less valuation allowance                             28,702,100   40,950,000
                                                    -----------  -----------

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

                                                                [Download Table]

                                            1999               1998  
                                            ----               ----  
                                                                     
Net deferred tax asset                   5,490,900          1,157,000

Deferred tax liabilities:                                            
    Property and equipment                 523,000            516,000
    Inventory                              354,000               -   
    Other                                   40,000            641,000
                                        ----------         ----------
    Gross deferred liabilities             917,000          1,157,000
                                        ----------         ----------
Net deferred tax asset                   4,573,900               -   
                                        ==========         ==========

         The net deferred tax asset of $4,573,900 is recorded in other assets at
December 31, 1999.                                            

       The valuation allowance for deferred tax assets as of January 1, 1999
      was $40,950,000. The net change in the total valuation allowance for
    the year ended December 31, 1999 was a decrease of $12,247,900. In
assessing the realizability of deferred tax assets, management
       considers whether it is more likely than not that some portion or all
of the deferred tax assets will not be realized. The ultimate 
        realization of deferred tax assets is dependent upon the generation of
   future taxable income during the periods in which those temporary
   differences become deductible. Management considers the scheduled
   reversal of the deferred assets and liabilities, projected future
       taxable income and the planning strategies in making this assessment.
     Based upon the historical taxable income and projections for future
   taxable income over the periods which the deferred tax assets are
        deductible, management believes it is more likely than not that Legend
   will realize the benefits of these deductible differences, net of
       existing valuation allowances at December 31, 1999. The amount of the
        deferred tax asset considered realizable, however, could be reduced in
the near term if estimates of future taxable income during the
carryforward periods are reduced.                             

         A receivable from Legend's parent company, representing the tax benefit
  obtained by the utilization of its 1998 operating loss, has been
         established in 1999 in accordance with a new tax sharing agreement used
      by the consolidated group which has an effective date retroactive to
January 1, 1998. (see Note 7)                                 

       As of December 31, 1999, Legend has a net operating loss carryforward
         of approximately $33,500,000 which substantially expires in 2000, 2001,
         2002 and 2003. This excludes net operating losses which were previously
elected to be treated as expiring under Internal Revenue Code 
Regulation Section 1.1502-32(b)(4).                           

(9)   FAIR VALUE OF FINANCIAL INSTRUMENTS                                 

Legend's financial instruments include cash, restricted cash, 
         receivables, accounts payable, and short-term and long-term borrowings.
    In general, Legend believes that the fair value of these financial
  instruments approximates their carrying amounts based upon their
         short-term nature or upon current market indicators, such as prevailing
  interest rates available to the Company for similar instruments.

     Legend's financial instruments also include restricted investments,
     consisting of an irrevocable trust fund containing three annuities,
         established to provide the annual payments required on the note payable
        to others (see Note 5(c)). The annual distributions from the annuities
        fully satisfy the interest and principal payments of the note payable.
         Moreover, these annuities cannot be surrendered and, therefore, have no
         cash value. Because the restricted investments and the note payable are
     inextricably linked, the fair value of each is considered to be the
carrying amounts reported in the balance sheet.               

(10)   CONCENTRATION OF ASSETS                                              

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

    The majority of Legend's assets are real estate holdings which are
        subject to possible fluctuating economic conditions. Such fluctuations
         can have a significant impact on the market values, which in turn could
  limit the potential recovery of the properties' carrying values.

(11)   STOCK OPTION PLAN                                                    

The Company has granted stock options under the Executive and 
        Directors' Stock Option Plan (the Plan) which was approved on June 25,
        1993. The Plan grants the Board of Directors the authority to issue up
         to 40,000 shares of the Company's common stock for stock option awards.
       The Plan consists of an Executive Option Grant Program and a Director
       Option Grant Program. Options issued under the Executive Option Grant
 Program vest over a three-year period. Options issued under the
        Director Option Grant Program vest over a two-year period. All options
granted lapse ten years from the date of grant.               

The following is a summary of stock option activity:          

                                                                [Download Table]

                                     Option price       Number of shares 
-------------------------------------------------------------------------
                                                                         
Balance at December 31, 1996       $11.69 to $28.13         25,280       

Granted                              $4.50 to $7.75          9,300       

Forfeited                           $4.50 to $28.13        (20,500)      
-------------------------------------------------------------------------

Balance at December 31, 1997        $4.50 to $17.19         14,080       

Granted                                    -                  -          
-------------------------------------------------------------------------

Balance at December 31, 1998        $4.50 to $17.19         14,080       

Granted                                    -                  -          
-------------------------------------------------------------------------

Balance at December 31, 1999        $4.50 to $17.19         14,080       
=========================================================================

         At December 31, 1999, the number of options exercisable was 14,080. The
     Company has adopted the disclosure-only provisions of SFAS No. 123,
   Accounting for Stock-Based Compensation. Accordingly, the Company
      applies Accounting Principles Board Opinion No. 25 in accounting for
         the Plan and therefore no compensation cost has been recognized for the
Plan.                                                         

       An insignificant amount of compensation cost would have been recorded
       had compensation cost for the Company's stock options been determined
 based upon the fair value at the grant date consistent with the
methodology prescribed under SFAS No. 123.                    

(12)    EMPLOYEE BENEFIT PLAN                                                 

The Company sponsors a defined contribution plan that provides
       employees of the Company an opportunity to accumulate funds for their
    retirement. Employees are eligible to join the plan if they are at
    least 21 years of age, have completed one year of service with the
       Company, and worked a minimum of 1,000 hours. The Company matches the
contributions of participating employees on the basis of the  
      percentages specified in the plan. Company matching contributions to
        the plan were approximately $53,000, $47,000 and $83,000 in 1999, 1998
and 1997, respectively.                                       

(13)   COMMITMENTS & CONTINGENCIES                                          

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

LEASES                                                        

         The Company is obligated under various leases covering office space and
equipment. Minimum payments under these leases are:           

                                                                [Download Table]

Fiscal Year                                         Operating 
--------------------------------------------------------------
                                                              
 2000                                               $ 237,225 
 2001                                                 189,715 
 2002                                                  39,013 
 2003                                                  14,031 
 2004                                                   1,862 
--------------------------------------------------------------
         Total minimum lease payments               $ 475,596 
--------------------------------------------------------------

       Rent expense was $307,221, $228,445 and $259,363 for years 1999, 1998
and 1997, respectively.                                       

LEGAL PROCEEDINGS                                                               

Ashburn Corporate Center                                      

    During August 1998, Legend filed a lawsuit and a memorandum of Lis
 Pendens in the Circuit Court of Loudoun County against Atlantic
     Research Corporation (ARC), which was amended during November 1998.
   Legend was seeking specific performance under a real estate sales
       contract and any other relief the court would offer. During the first
     quarter of 1999, Legend and ARC reached an agreement concerning the
         real estate sales contract which resulted in Legends acquisition of the
    second parcel in ACC (see Note 3). As a result, the litigation was
withdrawn and dismissed in the second quarter of 1999.        

Laguna Seca Ranch                                             

        On December 14, 1998, a Legend subsidiary, BMIF Monterey County Corp.,
filed a complaint against New Cities Development Group, Bates 
       Properties, Inc., New Cities Development Company, Deregt Development,
       Inc., Rancho Monterey, L.L.C. (collectively New Cities), Old Republic
         Title Company and David Bohen (collectively Old Republic) in the United
  States District Court, Northern District of California, San Jose
Division.                                                     

   During 1997, Legend sold the Laguna Seca Ranch to New Cities with
         Legend retaining a house with certain surrounding property known as Lot
       40 together with certain access easements to the nearest public right
         of way. New Cities agreed, as part of the sale, to establish a separate
      legal parcel for Lot 40 subsequent to the sale. As part of the sale,
        Legend agreed to cooperate and share equally in certain costs with New
    Cities in negotiating an agreement concerning water service to the
       property with California-American Water Company (Cal-Am). Pursuant to
         this, Legend agreed to post $200,000 in an interest bearing escrow held
 by Old Republic to pay any necessary amounts due from Legend in
      consummating an agreement with Cal-Am. An agreement was reached with
        Cal-Am on March 20, 1998 to provide the water needs, and Legend agreed
   with New Cities to contribute $60,000 out of the escrow to defray
        certain costs. On August 28, 1998 Cal-Am withdrew from its commitment.
       Subsequently, Old Republic released the $200,000 escrow with interest
to New Cities.                                                

      Legend claimed that New Cities breached certain implied covenants in
      refusing to negotiate and consummate the agreement with Cal-Am, that
      New Cities failed to establish Lot 40 as a separate parcel, and that
         Old Republic wrongly released the funds in escrow to New Cities. Legend
       was seeking to recover $140,000 plus interest on the escrow, that New
    Cities convey Lot 40, that New Cities pay approximately $75,000 of
         costs incurred by Legend for negotiating the agreement with Cal-Am, and
other damages.                                                

       During the first quarter of 2000, Legend and the defendants reached a
   settlement on all matters whereby New Cities agreed to pay Legend
$100,000, net of $5,887 for the reimbursement of utilities and
     services, related to the settlement for water service agreement and
convey Lot 40 to Legend. Legend agreed to pay                 

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

       New Cities $119,743 for certain development costs associated with Lot
40 and to remove the Lis Pendens from Lot 40.                 

General Legal Matters                                         

    The Company is subject to various lawsuits arising in the ordinary
       course of business. The Company is of the opinion that the outcome of
  any such lawsuits will not have a material adverse effect on its
operations.                                                   

(14)     PURCHASE OFFER                                                         

        On October 15, 1999, the Company announced that it received a proposal
 from Holdings for the merger of the Company with a wholly-owned
       subsidiary of Holdings. Pursuant to the offer, Holdings would acquire
 all of the outstanding shares of the Company's common stock not
         currently held by Holdings, for $0.13 per share in cash. Holdings holds
approximately 80% of the Company's common stock.              

     The Company's Board of Directors established a special committee to
        evaluate and consider the proposal. The proposed merger is subject to,
         among other things, (i) the execution of a definitive merger agreement,
     containing customary terms, (ii) approval of the transaction by the
         Company's special committee, Board of Directors and shareholders, (iii)
         compliance with all applicable regulatory and governmental requirements
       and (iv) receipt of an opinion from the special committee's financial
advisor that the consideration to be received by the public   
shareholders is fair from a financial point of view.          

   On January 6, 2000, the Company's Board of Directors and Holdings
        executed a definitive merger agreement where Holdings will acquire all
      of the outstanding shares, not currently held by Holdings, for $0.50
       per share in cash. The transaction is anticipated to close during the
second quarter of 2000.                                       

(15)     OPERATING SEGMENTS                                                     

     Legend's reportable operating segments are distinct operations that
    service differing markets. The real estate segment consists of the
      development, construction and sales activities for all of the Legend
      properties. The club operations consist of the clubhouse and related
       activities for Grand Harbor and Oak Harbor. Patient services includes
       the Royal Palm Convalescent Center which offers skilled nursing care,
and the Somerset House Assisted Living Facility.              

     The accounting policies for the reportable segments are the same as
  those described in Note 1. Internal interest is charged at rates
         similar to those charged on the payables to related parties. Summarized
    information concerning the reportable segments is presented in the
following table.                                              

                                                        [Enlarge/Download Table]

                                                                       Other,                 
                                Real         Club       Patient    Corporate and              
                               Estate     Operations   Services    Eliminations(1)    Total   
                              ---------   ----------   ---------   ---------------  --------- 
                                                                                              
($000 omitted)                                                                                

1999                                                                                          
Revenues                      $  62,237        7,159       2,756         2,825         74,977 
Operating costs and expenses    (59,157)      (9,480)     (3,532)       (6,214)       (78,383)
Other income/(expenses)          (8,231)        --          (277)        8,600             92 
Net income (loss) before                                                                      
    Minority interest         $  (5,151)      (2,321)     (1,053)        5,211         (3,314)
                              =========    =========   =========     =========      ========= 

Total assets                     86,425       13,199      14,717        13,348        127,689 

Capital expenditures          $     424           90           0           189            703 
                              =========    =========   =========     =========      ========= 

F-24

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LEGEND PROPERTIES, INC. AND SUBSIDIARIES
(A SUBSIDIARY OF RGI HOLDINGS, INC.)

Notes to Consolidated Financial Statements

                                                        [Enlarge/Download Table]
                                                                                        
1998                                                                                    
Revenues                      $  65,219       5,953       2,601       1,960      75,733 
Operating costs and expenses    (61,202)     (9,485)     (3,455)     (3,621)    (77,763)
Other income/(expenses)          (8,790)     (1,151)       (301)        135     (10,107)
                              ---------   ---------   ---------   ---------   --------- 
Net income (loss) before                                                                
    Minority interest         $  (4,773)     (4,683)     (1,155)     (1,526)    (12,137)
                              =========   =========   =========   =========   ========= 

Total assets                    113,101      13,684      15,523       5,250     147,558 
Capital expenditures          $     338         160        (135)        429         792 
                              =========   =========   =========   =========   ========= 

1997                                                                                    
Revenues                      $  43,596       5,345       2,718       3,969      55,628 
Operating costs and expenses    (44,916)     (8,499)     (2,736)     (4,096)    (60,247)
Other income / (expenses)       (10,452)       (711)       (127)      1,150     (10,140)
                              ---------   ---------   ---------   ---------   --------- 
Net income (loss) before                                                                
   Minority interest          $ (11,772)     (3,865)       (145)      1,023     (14,759)
                              =========   =========   =========   =========   ========= 

Total assets                    120,192      14,487      15,622      12,570     162,871 
Capital expenditures          $   1,042         958       3,840         457       6,297 
                              =========   =========   =========   =========   ========= 

(1)  Other includes other segments, which were not reportable in 1999 and 1998. 
   These other segments were not reported in earlier periods since they were
disposed of prior to 1998 and it was impractical to report separately.

F-25

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
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Filed as of:		4/17/00
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		12/31/96		3		52			10-K,  10-K/A,  8-K,  8-K/A,  NT 10-K
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		12/31/94		29					PRE 14A
		7/24/94		29
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		7/1/93		29
		6/25/93		24		52
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