EFFICIENCY LODGE, INC. FORM 10-Q

                  SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C.  20549
                              FORM 10-QSB


[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 1998

                                  OR

[   ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _____________ to ____________

                   Commission File Number 000-02290

                            EFFICIENCY LODGE, INC.
   -----------------------------------------------------------------
   (Exact name of small business issuer as specified in its charter)

        Georgia                                  58-0898219
----------------------------                 -------------------
(State or other jurisdiction                 (I.R.S. Employer
of incorporation or                          Identification No.)
organization)

      5342 Old Floyd Road, P.O. Box 635, Mableton, Georgia 30059
      ----------------------------------------------------------
               (Address of principal executive offices)

                             (770)819-0039
           ------------------------------------------------
           (Issuer's telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
past 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 /     /

Shares outstanding of each of the issuer's classes of common equity at
September 30, 1998: 1,043,683 shares of Common Stock, $0.10 per value
share.

Transitional Small Business Disclosure Format (check one)

Yes /     /    No /  X  /
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
<TABLE>
<CAPTION>
                                                             Efficiency Lodge, Inc.

                                                           CONSOLIDATED BALANCE SHEET


                                                                     ASSETS


                                                                  September 30, 1998       December 31, 1997
                                                                  ------------------       -----------------
                                                                      (Unaudited)

<S>                                                                   <C>                      <C>
Property and equipment, net                                           $16,120,682              $10,197,674
Cash                                                                      759,025                  169,246
Other assets                                                            1,297,559                1,479,390
                                                                      -----------              -----------

                                                                      $18,177,266              $11,846,310



                                                      LIABILITIES AND STOCKHOLDERS' EQUITY



Mortgage notes payable                                                $16,617,444              $11,222,325
Other liabilities                                                         849,833                  519,549
                                                                      -----------              -----------

    Total liabilities                                                  17,467,277               11,741,874

Stockholders' equity
  Common stock                                                            104,368                  104,368
  Additional paid-in capital                                               52,674                   52,674
  Accumulated earnings                                                    552,947                  (52,606)
 
                                                                      -----------              -----------
    Total stockholders' equity                                            709,989                  104,436
                                                                      -----------              -----------

                                                                      $18,177,266              $11,846,310
                                                                      ===========              ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                             Efficiency Lodge, Inc.

                                                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                                                   (Unaudited)

                                                      Nine months ended September 30, 1998



                                                            Additional
                                            Common           paid-in        Accumulated
                                            stock             capital         earnings           Total
                                            -------         ----------      -----------          -----
<S>                                        <C>              <C>              <C>                <C>
Balance at January 1, 1998                 $104,368         $  52,674        $  (52,606)        $104,436

Net income for the nine months                 --                --             605,553          605,553
                                           --------         ---------        ----------         --------

Balance at September 30, 1998              $104,368         $  52,674        $  552,947         $709,989
                                           ========         =========        ==========         ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                             Efficiency Lodge, Inc.

                                                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                   (Unaudited)

                                               For the Quarter Ending September 30, 1998 and 1997
                                              For the Nine Months Ended September 30 1998 and 1997



                                                       Quarter Ended                  Nine Months Ended
                                                       September 30,                     September 30,
                                                   1998             1997             1998             1997
                                               ----------       ----------       ----------       ----------
<S>                                            <C>              <C>              <C>              <C>
Revenues                                       $1,430,502       $1,215,235       $3,839,287       $3,215,538
Operating expenses                                808,258          703,689        2,094,951        2,049,225
                                               ----------       ----------       ----------       ----------

    Operating income                              622,244          511,546        1,744,336        1,166,313

Other (income) expense, net                       307,800          291,527          884,940          897,905
                                               ----------       ----------       ----------       ----------
    Earning (loss) before income 
      taxes                                       314,444          220,019          859,396          268,408

Provision for income taxes                         94,155           82,317          253,843          105,926
                                               ----------       ----------       ----------       ----------

    Net earnings (loss)                        $  220,289       $  137,702       $  605,553       $  162,482
                                               ==========       ==========       ==========       ==========
Net earnings (loss) per common
    share                                      $      .21       $      .13       $      .58       $      .16
                                               ==========       ==========       ==========       ==========

Weighted average number of 
    common shares outstanding                   1,043,683        1,026,880        1,043,683        1,026,880
                                               ==========       ==========       ==========       ==========
/TABLE
<PAGE>
<TABLE>
<CAPTION>
                                                             Efficiency Lodge, Inc.

                                                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                   (Unaudited)

                                                         Nine months ended September 30

                                                                        1998                  1997
                                                                    -----------          ------------
<S>                                                                 <C>                  <C>
Cash flows from operating activities:
  Net earnings (loss)                                               $   605,553          $    162,482
  Adjustments to reconcile net earnings (loss) to
    to net cash provided by operating activities:
       Depreciation and amortization                                    381,886               297,389
     Changes in assets and liabilities:
       Loss on sale of asset                                              --                   46,953
       Other assets                                                    (160,008)              (96,844)
       Other liabilities                                                330,284               269,175
                                                                    -----------          ------------
          Net cash provided by operating activities                   1,157,715               679,155

Cash flows from investing activities:
  Increase in advance to affiliate                                        --                  (52,165)
  Proceeds from sale of building                                          --                   84,448
  Capital expenditures                                               (5,963,056)           (1,664,794)
                                                                    -----------          ------------

          Net cash used for investing activities                     (5,963,056)           (1,632,511)

Cash flows from financing activities:
  Payoff of note on building sold                                         --                  (37,963)
  Principal payments on long-term debt                               (5,064,880)             (318,449)
  Proceeds from issuance of debt                                     10,460,000             1,700,000
                                                                    -----------          ------------

          Net cash provided (used) be financing activities            5,395,120             1,343,588
                                                                    -----------          ------------

Increase (decrease) in cash and cash equivalents                        589,779               390,232

Cash and cash equivalents, beginning of period                          169,246               159,944
                                                                    -----------          ------------

Cash and cash equivalents, end of period                            $   759,025          $    550,176
                                                                    ===========          ============

Cash paid during the period for interest                            $   931,180          $    888,264
                                                                    ===========          ============
/TABLE
<PAGE>
                        Efficiency Lodge, Inc.

    NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                 Nine months ended September 30, 1998


NOTE A - BASIS OF PREPARATION

     The accompanying unaudited interim consolidated financial
     statements of Efficiency Lodge, Inc. (The "Company") have been
     prepared in accordance with generally accepted accounting
     principles for interim financial statements and with the rules
     and regulations of the Securities and Exchange Commission. 
     Accordingly, they do not include all of the information and
     footnotes required by generally accepted accounting principles
     for complete financial statements.  In the opinion of management,
     all adjustments (consisting of normal recurring accruals)
     considered necessary for a fair presentation have been included.

     The results of operations for the quarter ended September 30,
     1998 are not necessarily indicative of the results that may be
     expected for the full year.  The interim consolidated financial
     statements should be read in conjunction with the Company's 1997
     consolidated financial statements and related notes.

NOTE B - NEW ACCOUNTING PRONOUNCEMENT

     The FASB has issued Statement of Financial Accounting Standards
     No. 128, Earnings Per Share,  which is effective for financial
     statements issued after December 15, 1997.  Early adoption of the
     new standard is not permitted.  The new standard eliminates
     primary and fully diluted earnings per share and requires
     presentation of basic and diluted earnings per share together
     with disclosures of how the per share amounts were computed.  The
     adoption of this new standard is not expected to have a material
     impact on the disclosure of earnings per share in the financial
     statements.

NOTE C - PRO FORMA RESULTS OF OPERATIONS

     The following pro forma results of operations for the nine months
     ended September 30, 1998 are unaudited and were prepared under
     the assumption that the Company was a taxable entity.


          Net earnings             $   605,553
          Earnings per share       $       .58
<PAGE>
Item 2.  Management Discussion and Analysis


     Total assets increased during the third quarter from $11,846,310
on December 31, 1997 to $18,177,266 on September 30, 1998.  This
increase is primarily the result of an increase in cash from $169,246
to $759,025 during the same period and an increase in fixed assets
resulting from two new lodges which began operations during the third
quarter 1998.

     Revenue increased during the third quarter from $1,215,235 in the
third quarter of 1997 to $1,430,502 in 1998.  This increase can be
attributed to two factors.  First, increased occupancies in existing
facilities and secondly, the addition of a new lodge in DeKalb County,
Georgia that had revenue for one month only in the first quarter
during 1997.  In addition, two new lodges began operations during the
third quarter 1998. One lodge is located in Cobb County, Georgia (Town
Center Lodge) and had operations for the last half of the third
quarter 1998. The second is located in Columbus, Georgia and had
operations for the months of August and September 1998. The costs
incurred in the construction of the Columbus Lodge have been incurred
by a corporation owned by the two controlling shareholders of the
Company. Upon completion and permanent financing, the ownership of
such corporation was transferred to the Company at no profit to the
controlling shareholders.

     Operating expenses increased in the third quarter from $703,689
in 1997 to $808,258 in 1998.  This increase is primarily attributable
to the one time start up expenses of the two new lodges.  As a result
of the increased revenue and increased expenses, operating income
during the third quarter of 1998 was $622,244 compared to $511,546 for
the same period in 1997.  Other expenses increased from $291,527 in
the third quarter of 1997 to $307,800 in 1998 which was primarily
attributable to the increased expenses of the additional lodges. 
Earnings before taxes were $314,444 compared to $220,019 during the
same period in 1997.  Net earnings were $220,289 for the third quarter
of 1998 compared to $137,702 in the third quarter of 1997.  Improved
earnings were again the result of increased revenue and decreased
operating expenses.

     In August 1998, five of the existing lodges were refinanced by a
conduit loan from Morgan  Stanley Financial Corporation. The
refinancing transaction also included financing for the purchase of
Town Center Lodge from an unrelated third party. The purchase price
for the assets of Town Center Lodge was $3,119,435.<PAGE>
Part II - OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

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

     (b) The registrant filed a Current Report on Form 8-K on
         September 3, 1998 reporting an acquisition under Item 2.
         On November 2, 1998, the company filed an amendment to
         that Form 8-K providing the following financial statements
         under Item 7:

              (1)  Financial Statements of Business Acquired for the
                   year ended December 31, 1997 and for the period
                   January 1, 1998 to August 17, 1998

              (2)  Pro Forma Financial Information for the year ended
                   December 31, 1997 and the six months ended June 30,
                   1998

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

       27           Financial Data Schedule - (for SEC use only)
<PAGE>
                               SIGNATURE


In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                             EFFICIENCY LODGE, INC.


DATE: November 10, 1998      By: /s/ W. Ray Barnes
                                 W. Ray Barnes
                                 President and Chief Executive Officer


DATE: November 10, 1998      By: /s/ Roy E. Barnes
                                 Roy E. Barnes
                                 Secretary/Treasurer
                                (Principal Financial and Accounting Officer)