UNITED STATES SECURITIES AND EXCHANGE
                    COMMISSION Washington, D.C.
                          20549 Form 10-KSB
            Annual Report Under Section 13 or 15(d)
            of the Securities Exchange Act of 1934
            
           For the fiscal year ended March 31, 1998
                Commission File Number 0-18727
                          CARC, Inc.
       (Name of small business issuer in its charter)

                              
South Carolina                             57-0641693
(State   or   other   jurisdiction        (I.R.S.Employer Identification No.)
 of incorporation of organization)

500 Downs Loop, Clemson, South Carolina     29631
(Address of principal executive offic      (Zip Code)

Issuer's telephone number, including
  area code:                                 (864) 654-1155


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


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

                        Common Stock
                      (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 in response to Item 
405 of Regulation S-B 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-KSB or 
any  amendment  to this Form 10-KSB [x]

The issuer's revenues for its most recent fiscal year: $3,284,946

The aggregate market value of the voting stock held by nonaffiliates of the 
registrant is unknown and the  stock is not currently being traded.

The number of shares outstanding of each of the registrant's classes of 
common stock, as of June 1, 1998:

            Common stock, $1 par value    536,000

Documents Incorporated by Reference

Portions of registrant's definitive proxy statement (to be filed pursuant to 
Regulation 14A) or definitive information  statement (to be filed pursuant to 
Regulation 14C) for registrant's 1998 annual meeting are incorporated by 
reference in Part III.
           
                                     PART 1
                         
Item 1.   Business.

CARC, Inc., the registrant, was organized under the laws  of the State  of  
South  Carolina on December 20, 1976 to  plan, develop, construct and operate 
a retirement community ("Clemson Downs")  in the Clemson, South Carolina area 
to include residential apartments, an  accredited health  care center and 
related  recreational  and social facilities.  The Company's present office
is located at  500 Downs  Loop,  Clemson,  South Carolina  29631,  and  its  
telephone number is (864) 654-1155.

The principal services rendered by the registrant are retirement community  
services.  They include the operation of a health  care center,  apartment  
rentals and providing recreational  and  other associated services.  For
the last two fiscal years, the percentage of total  revenue  contributed by 
each of these services  which provided 15% or more of consolidated revenue 
are as follows:

                                                  1998           1997
     1.     Health  care  center  -               51.9%          50.3%
     2.      Apartment    rentals    -            46.6%          47.7%

The apartment buildings at Clemson Downs provide a choice of seven floor 
plans.  The apartments rent for between $859 and $1,715  per month,
depending  on which floor plan is chosen  and whether the apartment is rented 
by one person or a couple.  One meal per day for  each  resident is included 
in the rental fee.   In  addition, residents may select a catered living 
program.  Apartment rates for the  catered  living program range between 
$1,590  and  $3,214  per month, depending on the floor plan chosen and number 
of occupants per   apartment.   The catered  living program provides special 
services and three meals per day to residents in the program.  Each
apartment has a patio deck, and each floor of each building has its own  washer 
and dryer room.  All buildings have entrances at ground level. Some buildings 
are also served by elevators.   Doors are electric with wheelchair level door 
openers.  There  are thermalpane  windows in patio doors.  All halls have 
assist rails and wide doorways.  Each  apartment unit has individual heating 
and airconditioning systems and an individual hot water heater.  All the 
apartments  and public areas in the apartment wings  are carpeted, with
the exception of the kitchen and bathroom areas.  The kitchens are  fully 
equipped with a range and oven, refrigerator, dishwasher and  disposal.
There is an emergency response call system to the health  care center in each 
apartment and smoke and heat detectors are located throughout the property.




Item 1.   Business. (continued)
The  health  care  center provides convalescent and rehabilitative treatment 
to inpatient adults, including those who are admitted after hospitalization 
and before returning to their homes, and is designed to supplement general
hospital care, rather than  compete directly  with general hospitals. The 
services  furnished  by the health  care  center  include  room, board,
nursing  care, drugs, supplies, medical equipment,  other  medical  services, 
social activities and physical, speech and recreational therapy.  The health  
care  center contains private and semi-private  rooms. It also has  laundry 
facilities and a reception area.  The admission, treatment  and  discharge of 
each health care center resident are under the direction of the  resident's 
attending  physician.  Although no full-time staff physicians are retained,  
the health care center has a part time-medical director as well as consulting 
and on-call physicians as required.

The health care center receives payments for resident care directly on  a  
private  pay basis, including payments from private  health insurance,
and from governmental reimbursement programs such as the federal  Medicare 
program.  Within the statutory framework of the Medicare program, there are 
substantial areas subject to administrative rulings, interpretations and
discretion which affect payments made under those programs.

Health  care facility operations are subject to federal, state and local 
government regulations.  Health care facilities are subject to periodic
inspection  by  state  licensing  agencies to determine whether the standards  
necessary for continued licensure are maintained.  In granting and renewing 
licenses, the state agencies consider, among other things, the buildings,
furniture and equipment; the qualifications of the administrative personnel 
and staff;  the quality of care; and the compliance with the laws and 
regulations  relating  to  operation  of  the facilities.  State licensure of 
a  health care facility is a prerequisite to certification for participation  
in the Medicare program.  Management believes that the health care center at
Clemson Downs is presently  in  substantial compliance with all applicable  
federal, state and local regulations with respect to licensure requirements. 
However, because those standards are subject to change, there  can be  no 
assurance that the health care center will be able to maintain its licenses  
upon a change in standards, and future changes in those standards could   
necessitate substantial expenditures by the registrant to comply with them.

Clemson Downs competes with other local and regional retirement communities 
on the basis of reputation and physical appearance and in the case of its 
health care center on the basis of the quality of care provided.  The primary,
secondary and  tertiary  service areas for Clemson Downs are as follows:

     Primary Service Area - the City of Clemson;
                         
     Secondary Service Area - an 18 mile radius extending from the City of
     Clemson; and

     Tertiary Service Area - All other areas.

Item 1.   Business. (continued)

Approximately 60% of the current patients in the health care center resided  
in the Primary Service Area immediately before  being admitted to the health 
care center.  The Secondary Service  Area accounted for almost 30% of the
current patients last residence and the remaining 10% of the patients at the 
health care  center were from  areas outside of the 18 mile radius, or the 
Tertiary  Service Area.

There  are  many  health  care institutions and corporations that furnish 
services similar to those offered by the registrant. Some competitors
operate  nationally  and  have substantially greater resources than the 
registrant.

The  registrant  also experiences competition  in the  search for nurses, 
technicians, aides and other high-quality professional  and non-professional 
employees.

The  registrant  maintains  professional liability, comprehensive general  
liability and other typical insurance coverage on all  its facilities.  The 
registrant believes that its insurance is adequate in amount and coverage.

The registrant employees approximately 75 persons in its business and 
believes its relations with its employees are good.

Item 2.   Properties.
The  only  property  owned by the registrant is Clemson  Downs, a retirement  
community located in Clemson, South Carolina, which consists of 96 
apartments, 52 nursing home beds and a community center which includes a 
dining room, library, recreation areas  and administrative offices.  The 
buildings are suitable  and adequate for  which they were designed and are in
good state of repair.  In management's opinion, all properties are adequately  
covered  by insurance.

There is a mortgage balance of $2,099,468 at March 31, 1998 that is 
collateralized by land and buildings.   The  Center  also has  a construction
loan with a balance of $2,392,874 at March 31, 1998 for  the construction  of 
a new apartment building and  activity center.  The construction is 95% 
complete at March 31, 1998.

Item 3.   Legal Proceedings.

Registrant  is  not  currently  engaged  in  legal proceedings of material   
consequence other than ordinary routine litigation incidental to its business.

Item 4.   Submission of Matters to a Vote of Shareholders.

No  matters  were  submitted to a vote of shareholders  during the fourth 
quarter of 1998.

                      PART II
                         
                         
Item 5.   Market  for  the Registrant's Common Equity  and Related
          Stockholder Matters.

There  is no established public trading market for the registrant's common  
stock.   The  Center has served as  agent in  transferring shares  from
stockholders to new residents interested in obtaining shares and has received 
fees for these services.   At March 31, 1998, there are approximately 536 
holders of the registrant's common  stock.  There have been no cash dividends
declared or  paid during the past two fiscal years to the holders of the 
registrant's common stock.

Item 6.   Management's   Discussion  and  Analysis of
          Financial Condition and Results of Operations.

The  discussion and analysis that follow discusses the financial condition,  
results of operations, liquidity and capital resources of the registrant.

Financial Condition

At March  31,  1998 and 1997, assets were $7.4 million  and $4.7 million, 
respectively.  The increase of $2.7 million is a result of construction in 
progress of $2.5 million and a deferred  tax asset for  net  operating  loss
carryforwards of  $200,000. During the second quarter of the current year, 
the Center exercised an option stated  in its mortgage agreement with a
bank to make an additional $150,000 payment against the outstanding principal 
without penalty.  A construction loan has been utilized for a new apartment 
building and  activity center and has a $2.4 million balance outstanding  at 
March 31, 1998.  All other assets and liabilities remained relatively 
unchanged.


Results of Operations

Net  income for the year ended March 31, 1998 and 1997 was $610,000 and 
$241,000, respectively.

Operating Revenues

Operating  revenues  for the year ended March  31, 1998  and 1997 totaled  
$3.3 million and $3.2 million, respectively.  The overall increase  in
operating revenues of $108,000 was due primarily to rate  increases  in  
health  care  center revenues and  apartment revenues.

Operating Expenses

Operating expenses remained relatively stable overall for the years ended  
March 31, 1998 and 1997 at $2.9 million each year. Within the categories of 
expenses, apartment and dietary decreased which was  offset   by   increases  
in healthcare, housekeeping, and administrative and general. Apartment 
expenses decreased $8,000 due to  a decrease in salary and maintenance costs.
Dietary expenses decreased approximately $29,000 due to a decrease in food 
and beverage costs and labor costs. Health care center costs increased
$7,000  due  to an increase in the use of temporary employees  and salary 
increases.  Housekeeping expenses increased approximately $6,000 due to 
additional employees and an increase in salary and supply costs.  
Administrative  and general  expenses increased approximately $10,000
due primarily to an increase in wages.

Nonoperating revenue

Net  nonoperating  revenues  for the  year  ended March  31, 1998 increased 
approximately $29,000 over the same period in 1997, primarily due to a
larger loss on the disposal of equipment recognized for the year ended 
March 31, 1997.

Liquidity

The Center  generated  $810,000  in  cash  flows from operating activities.  
The operating cash flows were used to fund $459,000 in financing activities, 
which was primarily repayments of long-term debt.

Future Commitments for Capital Expenditures

During  the  year ended March 31, 1998, the Center entered  into a contract  
with  a  construction company for the construction of  a twenty  unit
two-bedroom apartment building and an activity center at an estimated cost of 
$2,599,000.

The  Center received a maximum construction loan of $2,800,000 from Wachovia  
Bank. This loan is secured by the real estate and future apartment
rents.  Interest is at prime less .25% and payments of interest  only are due 
through October 1998. Beginning in November 1998, monthly principal and 
interest payments will be made through April 2007.  The monthly payment and
applicable interest rate  will be determined at a later date.

The  Center  is  establishing a plan to address Year  2000 issues. Successful   
implementation of this plan will eliminate any extraordinary expenses related 
to Year 2000 issue.   The Center plans  to  purchase software updates from
its sole data  processing company regarding their Year 2000 plans and 
compliance. The  Center will also  contact other vendors and suppliers that 
its operations are  dependent on to ensure Year 2000 compliance. The Center 
has  a reasonable basis to conclude that the Year 2000  issues  will  not
materially  affect  future financial results,  or cause  reported financial  
information not to be necessarily indicative  of  future operating
results or future financial condition.

Item 7.  Financial Statements.
      
The financial statements required to be filed here under are attached hereto 
following the signature page.

Item  8. Changes  in and Disagreement with Accountants on Accounting and
        Financial Disclosure.  -  None.
                     
                                PART III

Item 9. Directors and Executive Officers of the Registrant.

Item 10.  Executive Compensation.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

Item 12.  Certain Relationships and Related Transactions.

The information called for by Items 9, 10, 11, and 12 has been omitted 
because the registrant will file with the SEC no later than 120 days after the
close of its fiscal year a definitive proxy pursuant to Regulation 14A.  Such 
information is hereby incorporated by reference from registrants  definitive 
proxy statement.


                                     PART IV
                         
Item  13.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

A.    (1)  Financial Statements

      Balance Sheets--March 31, 1998

      Statements of Operations--Years Ended March31, 1998 and 1997

      Statements of Stockholders' Equity--Years Ended March 31, 1998 and 1997

      Statements of Cash Flows--Years Ended March 31, 1998 and 1997

      Notes to Financial Statements

      (2)  Schedules to the financial statements have been omitted as the
           required information is inapplicable.

B. Reports on Form 8-K - None.

C.    Exhibits

   (27) Financial Data Schedule

                                 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.
                                
                                      CARC, INC.
Date:  June 17, 1998                  by: /s/ Anita Davis
                                      Anita Davis
                                      Executive Officer



<TABLE>
<CAPTION>

                      Exhibit 27 Financial Data
                      Schedule

<S>                                                    <C>
Period type                                            Year
Fiscal year end
March 31, 1998
Period - start
April 1, 1997
Period - end
March 31, 1998
Cash                                                   $292,918
Securities                                             $199,596
Receivables                                            $110,237
Allowables                                             $(5,000)
Inventory                                              $ 11,120
Current assets                                         $842,878
Property, plant and equipment
$10,208,976
Depreciation
$3,931,527
Total assets
$7,357,476
Current liabilities                                    $646,568
Bonds                                                         -
Preferred - mandatory                                         -
Preferred                                                     -
Common                                                 $536,000
Other - SE
$1,873,497
Total liabilities and equity
$7,357,476
Sales                                                   -
Total revenues
$3,284,946
Cost of goods sold                                      -
Total costs
$2,680,176
Other - expenses                                        -
Loss-provision                                          -
Interest-expense                                       $209,724
Income-pretax                                          $420,658
Income-tax                                             (189,100)
Income-continuing                                      $609,758
Discontinued                                              -
Extraordinary                                             -
Changes                                                   -
Net - income                                           $609,758
EPS - primary                                          $   1.14
EPS - dilutes                                             0.00%




</TABLE>




                        Independent Auditors' Report


The Board of Directors
CARC, Inc.
Clemson, South Carolina

We  have audited the accompanying balance sheets of CARC, Inc. (the Center)  
as  of March 31, 1998 and 1997, and the related statements of operations, 
stockholders' equity and cash flows for the years then ended.  These financial
statements are the responsibility  of the Center's  management.  
Our responsibility is  to express  an opinion on these financial statements
based on our audits.

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

In  our opinion, the financial statements referred to above present fairly,  
in all material respects, the financial position of  CARC, Inc. as  of  
March  31,  1998 and 1997  and  the results  of  its operations  and  its  
cash  flows for  the years then ended, in conformity with generally accepted 
accounting principles.



Greenville, South Carolina
June 1, 1998



<TABLE>

<CAPTION>

                                  CARC, INC.
                                Balance Sheets
                            March 31, 1998 and 1997
                         
                         
                                   Assets
                         
<S>                                                    <C>           <C>
                                                       1998         1997 
Current assets
Cash and cash equivalents                          $  292,918     $  236,236
Investments                                           199,596        207,344 
Accounts receivable, net of allowance
   for doubtful accounts of $5,000 in
   1998 and 1997                                       105,237        118,349 
Accrued interest receivable                             13,958         15,343
Prepaid insurance                                        9,449         11,792
Inventory                                               11,120         10,799
Deferred tax asset                                     210,600          -
  Total current assets                                 842,878        599,863




Property, buildings, and equipment, net                6,277,449    3,857,751 
Entrance fees in escrow                                  112,817      105,918
Other assets                                             124,332      105,498



   Total assets                                      $ 7,357,476  $ 4,669,030

                                                        (continued)
                            CARC, INC.
                          Balance Sheets
                     March 31, 1998 and 1997


               Liabilities and Stockholders' Equity

                                                       1998           1997

Current liabilities
 Current installments of long-term debt              $ 325,248     $   270,564
 Accounts payable                                      169,253          53,965
 Accrued payroll                                        50,421          48,463
 Accrued payroll and property taxes                     24,855          20,559
 Accrued interest                                       13,534          16,503
 Other accrued liabilities                              53,763          39,332
 Unearned revenue                                        9,494          26,520

     Total current liabilities                         646,568         475,906

Refundable entrance fees and deposits                  112,817         105,918
Long-term debt, excluding current installments       4,167,094       2,287,467
Deferred tax liability                                  21,500             -

     Total liabilities                               4,947,979       2,869,291
                                           

Stockholders' equity:
 Common stock, $1 par value.  Authorized
   600,000 shares; issued and outstanding
   536,000 shares                                      536,000         536,000
 Additional paid-in capital                          2,111,886       2,111,886
 Accumulated deficit                                  (238,389)      (848,147)
                                           
     Total stockholders' equity                       2,409,497      1,799,739
                                           

     Total liabilities and stockholders'           
      Equity                                         $7,357,476     $4,669,030

</TABLE>



[CAPTION]
<TABLE>


                            CARC, INC.
                     Statements of Operations
                Years Ended March 31, 1998 and 1997


<S>                                                      <C>          <C>
                                                         1998         1997
Operating revenues:
 Apartments                                          $ 1,530,828   $ 1,517,084
 Health care center, net                               1,705,095     1,597,757
 Dietary                                                  39,258        45,881
 Residential services                                      4,823         6,860
 Miscellaneous                                             4,942         9,594
   Net operating revenues                              3,284,946     3,177,176
Operating expenses:
 Apartments                                               209,186      217,189
 Health care center                                       832,759      826,168
 Dietary                                                  585,516      614,780
 Residential services                                         894        6,100
 Maintenance and repair                                   108,420      107,076
 Housekeeping                                             131,141      126,272
 Administrative and general                               296,475      286,629
 Depreciation and Amortization                             275,457      283,784
 Utilities                                                 156,073     168,569
 Interest                                                  209,724     209,998
 Property taxes                                             84,255      82,265
   Total operating expenses                              2,889,900   2,928,830

   Income from operations                                  395,046     248,346

Nonoperating revenues (expenses):
 Interest and investment income                              31,368     26,585
 Loss on sale of equipment                                  (5,756)   (33,858)
      Nonoperating revenues (expenses)                       25,612    (7,273)

    Income before income tax benefit                        420,658    241,073

    Income tax benefit                                      189,100      -

    Net income                                            $ 609,758  $ 241,073

   Weighted common shares outstanding                     $ 536,000  $ 536,000

   Basic earnings per share                               $    1.14  $     .45
                                    
</TABLE>




[CAPTION]
<TABLE>
                                       
                                   CARC, INC.
                       Statements of Stockholders' Equity
                       Years Ended March 31, 1998 and 1997


<S>                            <C>       <C>           <C>          <C>
                                      Additional                   Total
                             Common     Paid-In     Accumulated  Stockholders'
                              Stock     Capital       Deficit       Equity

Balances at 
 March 31, 1996             $ 536,000  $ 2,111,886  $ (1,089,220)  $ 1,558,666

Net income                       -            -          241,073       241,073

Balances at 
 March 31, 1997               536,000    2,111,886       (848,147)   1,799,739

Net income                       -            -           609,758      609,758

Balances at 
 March 31, 1998             $ 536,000  $ 2,111,886     $ (238,389) $ 2,409,497


</TABLE>


[CAPTION]
<TABLE>

                                    CARC, INC.
                              Statements of Cash Flows
                         Years Ended March 31, 1998 and 1997


<S>                                                      <C>           <C>
                                                         1998          1997
Cash flows from operating activities:
 Net income                                       $   609,758      $  241,073
 Adjustments to reconcile net income
  to net cash provided by operating
  activities:
   Depreciation and amortization                       275,457        283,784
   Loss on sale of equipment                             5,756         33,858
   Decrease (increase) in:
     Accounts receivable, net                           13,112         (1,216)
     Accrued interest receivable                         1,385         (8,113)
     Prepaid insurance                                   2,343          8,821
     Inventory                                            (321)         4,125
     Other assets                                      (30,834)        (2,500)
     Deferred income taxes                            (189,100)            -
   Increase (decrease) in:
     Accounts payable                                  115,288         48,084
     Accrued payroll                                     1,958          6,441
     Accrued payroll and property taxes                  4,296         (7,193)
     Accrued interest payable                           (2,969)        (2,762)
     Other accrued liabilities                          14,431         30,265
     Unearned revenue                                  (17,026)         5,436
     Entrance fee proceeds                               6,899          6,855

      Net cash provided by
       operating activities                             810,433       646,958


Cash flows from investing activities:
 Purchases of investments                           $  (312,413)  $  (313,262)
 Maturities of investments                              313,262       321,325
 Proceeds from sale of equipment                           -               50
 Capital expenditures                                (2,688,911)     (219,602)

         Net cash used in
          investing activities                       (2,688,062)      (21,489)

Cash flows from financing activities:
 Principal payments of long-term debt                  (458,563)     (424,942)
 Proceeds  from construction loan                     2,392,874          -
         
         Net cash provided by (used
          in) financing activities                    1,934,311      (424,942)

         Net increase in cash
          and cash equivalents                           56,682        10,527

Cash and cash equivalents,
 at beginning of year                                   236,236       225,709

Cash and cash equivalents,
 at end of year                                       $  292,918   $  236,236


</TABLE>
        



                         
                                      CARC, INC.
                            Notes to Financial Statements
                               March 31, 1998 and 1997



1.  Summary of Significant Accounting Policies
    CARC,  Inc.  (the "Center") is a corporation existing  for the
    purpose  of  operating a retirement community in  the Clemson, South
    Carolina  area with an accredited health care facility, residential
    apartments and other facilities.  The following are the  significant
    accounting policies used in preparation of the accompanying
    financial statements.

    Operating  Revenues  - Apartment revenues  consist  of rental, meals
    and  miscellaneous  other  income.  Health Care  Center revenues
    consist primarily of room and board fees, and also include fees for
    medical supplies and physical therapy.  Dietary  revenues consist of 
    fees charged for meals and catered functions.

    Resident Revenue - Resident revenue is reported at the estimated net  
    realizable amounts from residents, third-party payors, and others for 
    service rendered.

    Revenue  received under the South Carolina Medicare program is subject to 
    audit and retroactive adjustment.  Settlements, if any, are included as 
    contractual revenue adjustments in the year of determination.

    Refundable Fees and Deposits - Refundable application fees are refunded  
    upon demand by the original applicant.  Refundable security deposits are 
    refunded upon termination of the rental agreement less the cost of 
    repairs.
    
    Investments - The Center accounts for investments according to Statement 
    of Financial Accounting Standards No. 115 "Accounting for  Certain  
    Investment in Debt and Equity Securities (SFAS 115).  Under SFAS 115,  
    investment securities held for investment  are stated at amortized cost 
    since the Center has both the ability and intent to hold such securities  
    to maturity.   Premiums and discounts on the investments  are amortized  
    into income over the contractual  terms  of  the security using a level 
    yield interest method.  Gains and losses on  the  sale  of these
    securities would be calculated on the specific identification method.

    Other Assets - Other assets consist of loan refinancing cost and closing  
    costs on a construction loan.  The refinancing costs are amortized over 
    the life of the loan, which is twelve years.  The closing costs will be 
    amortized over the life of the construction loan, when the loan is fully 
    settled. 

    Property, Buildings, and Equipment - Property, buildings, and equipment 
    are stated at cost or, if donated, at fair market value at date of 
    receipt less accumulated  depreciation. Depreciation on buildings and
    equipment is calculated on the straight-line method over the estimated 
    useful lives of the assets.  Equipment held under capital leases is 
    amortized using the straight-line method over the shorter of the lease 
    term or estimated useful life of the asset.

    Inventory - Inventory consists of food and medical supplies and is 
    carried at cost (first-in, first-out).

    Accounts Receivable - Accounts receivable consist of unsecured balances 
    from residents and patients for monthly apartment and health care center  
    charges.  The Center uses the allowance method to account for 
    uncollectible accounts receivable.  The allowance for bad debt accounts 
    is based upon prior years' experience and management's analysis of 
    possible bad debts.

    Income Taxes - The Center accounts for income taxes according to   
    Statement of Financial Accounting Standards No. 109 "Accounting  for  
    Income Taxes" (SFAS 109).  Under SFAS 109, deferred income assets and 
    liabilities are recognized for the tax consequences of "temporary 
    differences" by applying enacted statutory  rates  applicable for future  
    years to differences between the financial statement carrying amounts
    and the tax basis of existing assets and liabilities.  In the event  the 
    future tax consequences of differences between financial reporting bases 
    and the tax bases of the Center's assets and liabilities results in a 
    deferred tax asset, an evaluation  of the probability of being able to
    realize the future benefits of such an asset is made.  A valuation 
    allowance is provided for the portion of the deferred tax asset when it 
    is more likely than not that some portion or all of the deferred tax 
    asset will not be realized.

    Statements of Cash Flows - For purposes of the statements of cash flows,  
    the Center considers unrestricted highly liquid investments with an 
    original maturity ofthree months or less when purchased to be cash or 
    cash equivalents.

    As supplemental disclosure to the statements of cash flows, the Center 
    paid interest amounting to $212,872 in 1998 and $212,760 in 1997.  The 
    Center paid no income taxes in 1998 or 1997.  
  
    Unearned Revenue - Unearned revenue represents advance payment of gross 
    room rates.

    Earnings Per Share - The Center adopted the provisions of SFAS No.  128,  
    "Earnings Per Share", during fiscal year 1998.  The Statement established 
    standards for computing and presenting earnings per share (EPS).   SFAS
    No. 128 simplifies the standards for computing EPS previously found in 
    APB Opinion No. 15 and makes them comparable to international EPS
    standards.  The new statement requires the presentation of basic and 
    diluted earnings per share amounts.  In accordance with SFAS No. 128, all 
    prior periods EPS data has been restated.  Basic earnings per share were 
    computed by dividing earnings available to shareholders by the weighted 
    average number of common shares outstanding.  There are no securities 
    outstanding that represent potential common stock that would require 
    presentation of diluted earnings per share.
    
    Estimates - The presentation 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.
    
2.  Health Care Center Revenues
   
    A portion of Health Care Center revenue is generated by patients who 
    qualify for the Medicare program.  The approximate percentage of such 
    revenue was 4% in 1998 and 3% in 1997.  The remainder of the revenues are 
    from private paying patients.  Patient service revenue is recorded at
    established rates  with provisions made for differences between patient 
    service revenue at the Center's established rates and the related 
    Medicare reimbursement.

3.  Cash, Cash Equivalents and Investments

    A summary ofthe Center's cash, cash equivalents and investments at 
    March 31 follows:
                                                     1998         1997
     Cash                                         $ 292,918   $ 236,236
     Investments:
      U. S. Treasury obligations                    312,413      313,262
                                                   $ 605,33    $ 549,498
    
    The carrying amounts and approximate market value of investment 
    securities are:

                                                                  Estimated
                                         Amortized   Unrealized     Market
                                            Cost        Gains        Value

     March 31, 1998                      $ 312,413     $ 13,764    $ 326,177

     March 31, 1997                      $ 313,262     $ 15,343    $ 328,605

    There were no unrealized losses on securities or realized
    gains or losses on securities in 1998 or  1997.

    The aggregate of these investments are presented in the accompanying 
    balance sheets as follows:
                                                         1998         1997
     Investments                                       $199,596    $ 207,344
     Entrance fees in escrow                            112,817      105,918

                                                        $312,413    $ 313,262
    
    The Center maintains cash accounts at one financial institution.  At 
    times throughout the year, the Center may have balances in excess of FDIC 
    insured limits.  Due to the strong credit rating of this financial
    institution, management believes there is no significant credit risk 
    related to these accounts.

4.  Property, Building, and Equipment
   
    A summary of property, buildings, and equipment at March 31 follows:

                                                           1998       1997
     Land and land improvements                         $ 550,220  $ 550,220
     Buildings                                          6,314,414  6,308,892
     Equipment                                            565,188    538,168
     Vehicles                                              53,079     53,079
     Construction in progress                           2,726,075     98,974
                                                        ---------   --------   
                                                       10,208,976   7,549,333
     Less accumulated depreciation                      3,931,527   3,691,582
                                     
       Property, buildings and equipment, net          $6,277,449  $3,857,751

5.  Long-term Debt

    Long-term debt consists of a mortgage note due in October 2005 and a 
    construction loan.  The mortgage note has monthly payments of $40,626, 
    including interest at 7.5% which are to be made during the first six 
    years of the loan period.  During the second six years, the interest rate 
    will equal the yield of the bank's cost of issuing a large certificate of 
    deposit in the secondary market and having a maturity most proximate to  
    six years plus 2.5% per annum.  The note had an outstanding balance of  
    $2,099,468 at March 31, 1998 and $2,558,031 at March 31, 1997.  The note 
    is collateralized by land and buildings with a depreciated cost of
    approximately $3,420,000 at March 31, 1998.
    
    The mortgage note has certain restrictive covenants pertaining to its  
    current ratio, working capital, cash flow coverage ratio, and tangible 
    worth. The Center is also limited as to property and equipment purchases.  
    As of March 31, 1998, the Center was in compliance with such covenants or  
    on June 2, 1998, received a waiver for events of noncompliance.
    
    The Center received a maximum construction loan of $2,800,000 from 
    Wachovia Bank.  This loan is secured by the real estate and apartment  
    rents.  Interest is at prime less .25% and payments of interest only are 
    due through October 1998.  Beginning in November 1998, monthly principal 
    and interest payments will be made through April 2007.  The monthly 
    payment and applicable interest rate will be determined at a later date.  
    At March 31, 1998, $2,392,874 has been drawn on this loan.  Interest of 
    approximately $43,500 has been capitalized at March 31, 1998.
    
    The aggregate annual maturities of long-term debt for each of the  five 
    years subsequent to March 31, 1998 and thereafter are as follows:
        
        1999                                            $325,248
        2000                                             363,445
        2001                                             316,033
        2002                                             343,290
        2003                                             372,901
        Thereafter                                     2,771,425
                                                      $4,492,342 

6.  Income Taxes

    As of March 31, 1998, the Center has net operating loss carryforwards of  
    approximately $525,000 available to offset future  taxable income which 
    expire as follows: 2005, $129,000; 2006, $269,000; and 2007, $127,000.

    The components of the net deferred income tax assets are as follows:
    
    
    
    
                                                        1998         1997
     Deferred income tax asset:
      Net operating loss carryovers                  $ 205,000     $ 368,700
      Accrued expense not currently
        deductible for tax purposes                      9,300         8,600
      Valuation allowance                                  -        (340,000)

     Deferred income tax liability:
      Tax depreciation greater than
        book depreciation                              (21,500)      (27,000)
      Accrued revenue not currently
        recognized for tax purposes                     (3,700)      (10,300)
                                           
        Net deferred income tax asset                $ 189,100      $    -

    The components giving rise to the net deferred tax asset described above  
    have been included in the accompanying balance sheets as of March 31, 
    1998 and 1997 as follows:
  
                                                         1998         1997
     Current assets                                   $ 210,600    $     -
     Noncurrent liabilities                             (21,500)         -

                                                      $ 189,100    $     -


   The effective tax rate on income before income taxes was different than 
   amounts computed by applying the statutory Federal tax rate of 34% to 
   income before income taxes.  The reasons for these differences are as 
   follows:
                                                         1998         1997
     Income taxes at statutory rate                   $ 143,000    $  82,000
     Increase (decrease) in taxes resulting from:
      State taxes, net of Federal tax benefit            14,000        8,000
     Utilization of net operating loss carryforwards   (157,000)     (90,000)
     Recognition of future income tax benefit
       of net operating loss carryforwards             (189,100)         -


       Actual tax benefit                             $(189,100)     $   -

    Realization of deferred tax assets is dependent upon sufficient future   
    taxable income during the period that deductible temporary differences are 
    expected to be available to reduce taxable income.
  
7.  Retirement Plan

    The Center has a 401(k) Retirement Plan for all employees who have 
    completed one year of service.  Active participants may elect to have the 
    Center make salary reduction contributions on their behalf based on a 
    percentage of their earnings, not to exceed 15%.  The Center has the 
    option of making an annual discretionary contribution and can also match  
    each employees' contribution to the plan up to a predetermined limit.  
    The Center's  combined contribution totaled $13,582 and $26,290 for the 
    years ended March 31,1998 and 1997, respectively.
  
8.  Commitments

    The Center entered into a contract with a construction company in April 
    1997 for the construction of a new apartment building and an activity 
    center at an estimated cost of $2,599,000.   As of March 31, 1998, the 
    construction is 95% complete.

9.  Financial Instruments

   Generally  accepted accounting principles require disclosure of fair value 
   information about financial instruments, whether or not recognized in the 
   balance sheet, for which it is practicable to estimate fair value.  
   Instruments such as accounts receivable, accounts payable, accrued 
   expenses, notes payable that are currently due, and cash equivalents are 
   of a short-term nature and carrying value approximates fair value.  The
   estimated fair value of long-term notes payable is based on discounting 
   amounts at contractual rates using  current  market rates  for similar 
   instruments.  The Center estimates the fair value of these items to be the
   same as their carrying value.