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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20459

                                   FORM 10-QSB

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

               For the Quarterly period ending September 30, 1998

[ ]             TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the Transition period from ____ to ____

                         Commission file number 0-27108


                          REGENT ASSISTED LIVING, INC.
             (Exact name of registrant as specified in its charter)


                      OREGON                        93-1171049
          (State or other jurisdiction of          (IRS Employer
           incorporation or organization)        Identification No.)

                                   Suite 1000
                               121 SW Morrison St.
                             Portland, Oregon 97204
                    (Address of principle executive offices)


                                  503-227-4000
              (Registrant's telephone number, including area code)

Indicated by check mark whether Registrant (1) has filed all reports 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 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 of Registrant's Common Stock, No par value,
                  outstanding at November 12, 1998 - 4,633,000

--------------------------------------------------------------------------------
<PAGE>
                          REGENT ASSISTED LIVING, INC.

                                   FORM 10-QSB

                               September 30, 1998


                                      INDEX


                                                                            Page

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

Condensed Consolidated Balance Sheets as of September 30, 1998
and December 31, 1997 .........................................................3

Condensed Consolidated Statements of Operations for the three months
and nine months ended September 30, 1998 and 1997 .............................4

Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 1998 and 1997 .............................................5

Notes to Condensed Consolidated Financial Statements ..........................6

Item 2.  Management's Discussion and Analysis or Plan of Operation ............9

PART II- OTHER INFORMATION

Item 5.  Other Information ...................................................18

Item 6.  Exhibits and Reports on Form 8-K ....................................18


Page 2
<PAGE>
<TABLE>
<CAPTION>
                         PART I - FINANCIAL INFORMATION

                          ITEM 1 - FINANCIAL STATEMENTS

                          REGENT ASSISTED LIVING, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                 September 30,
                                                                         1998                  December 31,
                                                                   (Unaudited)                        1997
                                                                -------------                -------------
<S>                                                             <C>                          <C>          
ASSETS

Current assets:
     Cash and cash equivalents                                  $   3,896,252                $   1,865,576
     Accounts receivable                                            1,128,134                      128,110
     Prepaid expenses                                                 270,156                      249,708
     Construction advances receivable                                  36,546                      123,670
                                                                -------------                -------------

        Total current assets                                        5,331,088                    2,367,064

Property and equipment,  net                                       59,801,798                   69,820,324
Investment in joint venture                                           378,463                      401,460
Restricted cash                                                     2,598,831                    2,361,993
Other assets                                                        2,294,692                      752,932
                                                                -------------                -------------

        Total assets                                            $  70,404,872                $  75,703,773
                                                                =============                =============


LIABILITIES

Current liabilities:
     Current portion of long-term debt                          $     268,371                $     218,881
     Short-term borrowings                                                  -                    4,500,000
     Construction accounts payable                                    972,380                      583,043
     Accounts payable and other accrued expenses                    1,821,072                      685,136
     Accrued payroll                                                  941,493                      502,568
     Accrued interest                                                 290,533                      179,963
                                                                -------------                -------------

        Total current liabilities                                   4,293,849                    6,669,591

Long-term debt                                                     43,753,762                   51,450,545
Convertible subordinated notes                                      9,000,000                            -
Deferred gains and development fees, net                            5,211,561                      898,802
Other liabilities                                                   1,295,085                      517,578
                                                                -------------                -------------

        Total liabilities                                          63,554,257                   59,536,516
                                                                -------------                -------------

Minority Interest                                                           -                      250,000
                                                                -------------                -------------

SHAREHOLDERS' EQUITY

Preferred stock, no par value, 5,000,000 shares authorized;
     1,666,667 shares issued and outstanding                        9,349,841                    9,349,841
Common stock, no par value, 25,000,000 shares authorized;
     4,633,000 shares issued and outstanding                       10,808,703                   10,808,703
Accumulated deficit                                               (13,307,929)                  (4,241,287)
                                                                -------------                -------------

        Total shareholders' equity                                  6,850,615                   15,917,257
                                                                -------------                -------------

        Total liabilities and shareholders' equity              $  70,404,872                $  75,703,773
                                                                =============                =============


The accompanying notes are an integral part of these condensed consolidated
financial statements.
</TABLE>

Page 3
<PAGE>
<TABLE>
<CAPTION>
                          REGENT ASSISTED LIVING, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                                       (Unaudited)                                     (Unaudited)

                                        Three Months Ended     Three Months Ended      Nine Months Ended        Nine Months Ended
                                        September 30, 1998     September 30, 1997      September 30, 1998      September 30, 1997

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

<S>                                       <C>                    <C>                      <C>                   <C>

Revenues:
     Rental and service                       $8,864,178             $3,542,710             $19,722,689             $10,082,807
     Management fee                               42,867                 53,370                 145,116                 141,491
                                          ---------------        ---------------          --------------        ----------------

        Total revenues                         8,907,045              3,596,080              19,867,805              10,224,298
                                          ---------------        ---------------          --------------        ----------------

Operating expenses:
     Residence operating expenses              7,692,640              2,681,858              17,459,256               7,015,759
     General and administrative                1,258,457                871,058               3,213,189               2,233,909
     Lease expense                             2,687,297                914,776               6,122,196               2,403,127
     Depreciation and amortization               409,167                 88,646                 764,719                 235,494
                                          ---------------        ---------------          --------------        ----------------

        Total operating expenses              12,047,561              4,556,338              27,559,360              11,888,289
                                          ---------------        ---------------          --------------        ----------------

        Operating income (loss)               (3,140,516)              (960,258)             (7,691,555)             (1,663,991)

Interest income                                   76,634                 83,290                 232,556                 305,881
Interest expense, net                           (444,328)                 -                    (939,340)               (101,228)
Equity interest in joint venture                (170,503)                 -                    (203,560)                 -
Other income, net                                 (7,044)                (4,764)                (14,743)                 12,840
                                          ---------------        ---------------          --------------        ----------------

        Income (loss) before income taxes     (3,685,757)              (881,732)             (8,616,642)             (1,446,498)

Income tax benefit                                 -                      -                       -                      24,500
                                          ---------------        ---------------          --------------        ----------------

        Net income (loss)                    ($3,685,757)             ($881,732)            ($8,616,642)            ($1,421,998)
                                          ===============        ===============          ==============        ================

Basic earnings (loss) per common share            ($0.83)                ($0.22)                 ($1.96)                 ($0.40)
                                          ===============        ===============          ==============        ================

Diluted earnings (loss) per common share          ($0.83)                ($0.22)                 ($1.96)                 ($0.40)
                                          ===============        ===============          ==============        ================

Weighted average common shares outstanding:

     Basic                                     4,633,000              4,633,000               4,633,000               4,633,000
                                          ===============        ===============          ==============        ================

     Diluted                                   4,633,000              4,633,000               4,633,000               4,633,000
                                          ===============        ===============          ==============        ================


The accompanying notes are an integral part of these condensed consolidated
financial statements.
</TABLE>

Page 4
<PAGE>
Page 5
                          REGENT ASSISTED LIVING, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                               (Unaudited)
                                                                                Nine Months Ended     Nine Months Ended
                                                                                September 30, 1998    September 30, 1997
                                                                                 ----------------      ----------------

<S>                                                                                <C>                   <C>
Cash flows from operating activities:
   Net income (loss)                                                               ($8,616,642)          ($1,421,998)
   Adjustments to reconcile net income (loss) to net
      cash provided by (used in) operating activities:
         Depreciation and amortization                                                 764,719               235,494
         Amortization of deferred gains and development fees                          (229,866)               (7,320)
         Equity interest in joint venture                                              203,560                   -
         Non-cash operating expense                                                     70,506                   -
         Changes in other assets and liabilities:
            Accounts receivable                                                       (170,616)               49,671
            Prepaid expenses                                                           (48,108)             (107,361)
            Deferred income taxes                                                          -                  33,100
            Other assets                                                              (699,007)               19,795
            Accounts payable and other accrued expenses                              1,685,431               (16,534)
            Other liabilities                                                          777,507               (20,781)
                                                                                   ------------          ------------
               Net cash used in operating activities                                (6,262,516)           (1,235,934)
                                                                                   ------------          ------------

Cash flows from investing activities:
   Maturity of investments, net                                                            -               2,939,448
   Purchases of property and equipment                                             (30,419,542)          (31,660,739)
   Increase in construction related accounts payable                                   389,337             1,076,157
   Investment in joint venture                                                        (118,563)              (66,340)
   Deposits to replacement reserve account, net                                        (38,814)               (5,482)
                                                                                   ------------          ------------
               Net cash used in investing activities                               (30,187,582)          (27,716,956)

Cash flows from financing activities:
   Repayment of short-term borrowings                                               (4,500,000)            1,532,205
   Proceeds from issuance of long-term debt                                         23,590,924            22,664,466
   Payments on long-term debt                                                      (31,488,217)             (118,041)
   Construction advances                                                                87,124               922,038
   Prepayments and deposits for financing arrangements, net                           (762,524)             (234,364)
   Restricted cash for financing arrangements, net                                    (198,024)             (724,469)
   Deferred fees from financing arrangements                                           180,219               730,000
   Proceeds from financing arrangements                                             43,021,272                   -
   Proceeds from issuance of convertible subordinated notes                          9,000,000                   -
   Contributions by minority partner                                                       -                 250,000
   Preferred stock issuance costs                                                          -                (600,159)
   Preferred stock dividends                                                          (450,000)             (476,230)
                                                                                   ------------           -----------
               Net cash provided by financing activities                            38,480,774            23,945,446
                                                                                   ------------           -----------

               Net increase (decrease) in cash and cash equivalents                  2,030,676            (5,007,444)

Cash and cash equivalents, beginning of period                                       1,865,576             8,650,817
                                                                                   ------------           -----------
Cash and cash equivalents, end of period                                            $3,896,252            $3,643,373
                                                                                   ============           ===========

Supplemental disclosure of cash flow information:

   Cash paid for interest                                                           $3,117,091              $997,896
                                                                                   ============           ===========

Supplemental disclosure of non-cash investing and financing activities:

   Long-term debt incurred to acquire minority interest                               $250,000                   -
                                                                                   ============           ===========
   Sale of property and equipment to joint venture                                    $967,408                   -
                                                                                   ============           ===========

The accompanying notes are an integral part of these condensed consolidated
financial statements.
</TABLE>

Page 5
<PAGE>
                          REGENT ASSISTED LIVING, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.   Operations and Summary of Significant Accounting Policies:


     The Company

     Regent Assisted Living, Inc. ("the Company") is an owner, operator, and
     developer of private-pay assisted living communities including stand-alone
     Alzheimer's communities. Assisted living is part of a spectrum of long-term
     care services that provide a combination of housing, personal services and
     health care designed to respond to elderly individuals who require
     assistance with activities of daily living in a manner that promotes
     maximum independence.

     The results of operations for the nine months ended September 30, 1998,
     reflect the operations of fifteen new assisted living communities, one of
     which was managed for a portion of the period; five stabilized assisted
     living communities, one of which was managed for a portion of the period;
     fees from the management of five communities (two which were converted to
     leases); and pre-opening costs related to two additional newly developed
     communities that had not yet commenced rental activities during the period.
     The results of operations for the nine months ended September 30, 1997,
     reflect the operations of one new and four stabilized assisted living
     communities, fees from the management of two communities, and pre-opening
     costs related to ten additional newly developed communities that had not
     yet commenced rental activities during the period.

     As of November 12, 1998, the Company had also commenced operations at its
     new assisted living community in Austin, Texas; is awaiting licensure of
     its new Regent Court stand-alone Alzheimer's community in Scottsdale,
     Arizona; and had an additional 21 assisted living communities (including
     four Alzheimer's communities) in various stages of construction and
     development.


     Basis of Presentation

     The condensed consolidated financial statements include the accounts of the
     Company and its majority owned subsidiary. All significant inter-company
     accounts and transactions have been eliminated in consolidation.

Page 6
<PAGE>
                          REGENT ASSISTED LIVING, INC.
                         NOTES TO CONDENSED CONSOLIDATED
                         FINANCIAL STATEMENTS, Continued


1.   Operations and Summary of Significant Accounting Policies, Continued:

     The accompanying unaudited condensed consolidated financial statements as
     of September 30, 1998, and for the three month and nine month periods ended
     September 30, 1998 and 1997, have been prepared in conformity with
     generally accepted accounting principles. The financial information as of
     December 31, 1997, is derived from the Company's Form 10-KSB for the year
     ended December 31, 1997. Certain information or footnote disclosures
     normally included in financial statements prepared in accordance with
     generally accepted accounting principles have been condensed or omitted
     pursuant to the rules and regulations of the Securities and Exchange
     Commission. In the opinion of management, the accompanying financial
     statements include all adjustments necessary (which are of a normal and
     recurring nature) for the fair presentation of the results of the interim
     periods presented. The accompanying financial statements should be read in
     conjunction with the Company's audited consolidated financial statements
     for the year ended December 31, 1997, included in the Company's Form 10-KSB
     for the year ended December 31, 1997.

     Operating results for the three month and nine month periods ended
     September 30, 1998, are not necessarily indicative of the results that may
     be expected for the remainder of the fiscal year ending December 31, 1998.


2.   Property and Equipment:

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

<TABLE>
<CAPTION>
                                                     September 30,        December 31,
                                                         1998                 1997
                                                     -------------        ------------


          <S>                                         <C>                <C>        
          Land                                        $3,091,300         $ 1,730,810
          Buildings and improvements                  29,388,304          12,713,346
          Furniture and equipment                      2,903,639           1,512,868
          Construction in progress                    25,592,036          54,429,419
                                                     -----------          ----------

                                                      60,975,279          70,386,443

          Less accumulated depreciation
              and amortization                         1,173,481             566,119
                                                     -----------          ----------

              Total property and equipment, net      $59,801,798         $69,820,324
                                                     ===========         ===========
</TABLE>

     Land, buildings and certain furniture and equipment serve as collateral for
     long-term debt.

Page 7
<PAGE>
                          REGENT ASSISTED LIVING, INC.
                         NOTES TO CONDENSED CONSOLIDATED
                         FINANCIAL STATEMENTS, Continued

3.   Administrative Services Agreement:

     Pursuant to the terms of an Administrative Services Agreement, the Company
     provides executive assistance, accounting and financial management
     services, legal and administrative assistance, insurance, management
     information services, and other management services as required by Bowen
     Property Management Co., Bowen Financial Services Corp., Bowen Development
     Company and Bowen Condominium Marketing, Inc., all of which are Oregon
     corporations that are wholly owned or controlled by Mr. Bowen, the
     Company's Chairman, President, and Chief Executive Officer. Under the terms
     of the agreement, the Company will be reimbursed at its cost on a monthly
     basis for all services provided.


4.   Earnings (Loss) Per Common Share:

     Basic earnings per share (EPS) and diluted EPS are computed using the
     methods prescribed by Statement of Financial Accounting Standard No. 128,
     Earnings Per Share (SFAS 128). Basic EPS is calculated using income (loss)
     attributable to common shares (after deducting preferred dividends) divided
     by the weighted average number of common shares outstanding for the period.
     Diluted EPS is calculated using income (loss) attributable to common shares
     (after deducting preferred dividends and considering the effects of
     dilutive common equivalent shares) divided by the weighted average number
     of common shares and dilutive common shares outstanding for the period.
     Basic and diluted earnings (loss) per common share includes a deduction of
     preferred stock dividends declared, which totaled $150,000 and $450,000 for
     the three month and nine month periods ended September 30, 1998,
     respectively.

5.   Accounting Pronouncements:

     On April 3, 1998, the AICPA Accounting Standards Executive Committee issued
     Statement of Position 98-5, Reporting on the Costs of Start-up Activities
     (SOP 98-5). This statement requires that the costs of start-up activities,
     including organization costs, be expensed as incurred. SOP 98-5 is
     effective for financial statements for fiscal years beginning after
     December 15, 1998. Consistent with its past accounting practices, the
     Company expenses all start up costs and thus the adoption of this statement
     will have no impact on the Company's reported results.

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
     Accounting for Derivative Instruments and Hedging Activities. This
     Statement establishes accounting and reporting standards for derivative
     instruments, including certain derivative instruments embedded in other
     contracts and for hedging activities and is effective for all quarters of
     fiscal years beginning after June 15, 1999. The adoption of this Statement
     will have no impact on the Company's reported results.

Page 8
<PAGE>
ITEM 2.  Management's Discussion and Analysis or Plan of Operation.


Overview

The Company

The Company reported a net loss of $3,685,757, or $0.83 per diluted share, on
revenues of $8,907,045 for the three months ended September 30, 1998. For the
nine months ended September 30, 1998, the Company reported a net loss of
$8,616,642, or $1.96 per diluted share, on revenues of $19,867,805.

     Current Communities. The table below sets forth certain information
regarding the Company's communities at September 30, 1998.

<TABLE>
<CAPTION>
                                         Operations
Community                Location        Commenced      Units(1)    Beds(2)     Interest
---------                --------        ----------     --------    -------     --------

<S>                      <C>               <C>            <C>         <C>       <C>
Oregon
   Park Place            Portland          1986           112         112       Lease(3)
   Regency Park          Portland          1987           122         142       Lease
   Sheldon Park          Eugene            1998           108         124       Lease
Washington
   Northshore House      Kenmore           1998            85          98       Manage(4)
   Sterling Park         Redmond           1990           162         192       Lease
California
   Laurel Springs        Bakersfield       1998           113         127       Own
   Orchard Park          Clovis            1998           112         128       Lease
   Summerfield House     Vacaville         1998           109         126       Own
   Sun Oak               Citrus Heights    1997            40          50       Manage
   Sunnyside Court       Fremont           1998            40          78       Lease
   Sunshine Villa        Santa Cruz        1990           106         126       Lease
   The Palms             Roseville         1998            93         108       Lease
   Villa Sera            Salinas           1998           150         150       Manage
   Willow Creek          Folsom            1997           104         117       Lease
Idaho
   West Wind             Boise             1997            48          52       Lease
   Willow Park           Boise             1997           117         130       Lease
Nevada
  Mira Loma              Henderson         1998           115         133       Own
New Mexico
   Sandia Springs        Rio Rancho        1998           109         126       Lease
Texas
   Hamilton House        San Antonio       1997           116         135       Lease
Arizona
   Canyon Crest          Tucson            1998           117         137       Lease
Wyoming
   Aspen Wind            Cheyenne          1998            77          77       Lease
   Meadow Wind           Casper            1998            53          53       Lease
   Spring Wind           Laramie           1998            53          53       Lease
Totals                                                  2,261       2,574
                                                        =====       =====
</TABLE>

Page 9
<PAGE>
(1) A "unit" is a studio or a one or two bedroom apartment.

(2)  "Beds" reflects the actual number of beds used by the Company for census
     purposes, which in no event is a number greater than the maximum number of
     licensed beds permitted under the community's license.

(3)  The Company completed a lease-acquisition of Park Place during the second
     quarter of 1998. The Company had managed the Community prior to this
     transaction.

(4)  A limited liability company in which the Company owns a 50 percent interest
     owns this community.

As of November 12, 1998, the Company had also commenced operations at its
Austin, Texas community and is awaiting licensure of its Regent Court community
in Scottsdale, Arizona:

<TABLE>
<CAPTION>
       Location               No. of Units         No. of Beds          Interest
       --------               ------------         -----------          --------
<S>                               <C>                  <C>                <C>
Austin, Texas                     117                  137                Own
Scottsdale, Arizona                24                   48                Lease
</TABLE>

Also, as of November 12, 1998, the Company had commenced construction on the
following new communities:

<TABLE>
<CAPTION>
                               Projected         Expected Quarter
       Location               No. of Beds            Opening            Interest
       --------               -----------            -------            --------
<S>                                <C>               <C>                   <C>
Modesto, California                48                1st-99                Own
Clackamas, Oregon                  48                2nd-99                Own
Kent, Washington                   48                2nd-99                Manage(1)
Scottsdale, Arizona               115                2nd-99                Own
Corvallis, Oregon                  48                4th-99                Own
Mesa, Arizona                     132                1st-00                Own

(1)  A limited liability company in which the Company owns a 10 percent interest
     owns this community.
</TABLE>

The Company is engaged in various stages of development on 15 additional new
communities. If these 15 communities are completed, then, together with the
communities currently under construction, total operations of the Company will
increase by approximately 1,900 beds to a total of approximately 4,600 beds. The
Company continues to pursue its primary strategy of developing new communities
and is therefore engaged in negotiations to acquire several additional sites and
is pursuing joint venture opportunities with parties who control parcels of land
in strategic markets. All costs associated with the development of these
communities have been capitalized as "Construction in Progress" as disclosed in
Note 2 to the condensed consolidated financial statements.

Operating results for the three month and nine month periods ended September 30,
1998, are not necessarily indicative of future financial performance as the
Company intends to expand its operating base of communities.

Page 10
<PAGE>
Three Months Ended September 30, 1998 Compared to Three Months Ended September
30, 1997

Revenues. For the three month period ended September 30, 1998, revenues were
$8,907,045 compared to $3,596,080 in the three month period ended September 30,
1997. The Company operated twenty communities and managed two communities in the
third quarter of 1998. The Company operated five communities and managed two in
the third quarter of 1997. The increase in revenue of $5,310,965 or 147.7
percent, includes $5,094,471 of revenue from newly opened and acquired
communities and an increase in revenue of $226,997 at the Company's three
communities that had stabilized occupancy at the beginning of both periods.
Overall average occupancy at these three communities increased to 95.6 percent
for the three month period ended September 30, 1998, whereas occupancy was 91.0
percent for the same period in 1997. A community is considered "stabilized" for
reporting purposes after it first attains occupancy of 95.0 percent.

Residence Operating Expenses. Residence operating expenses were $7,692,640 for
the three month period ended September 30, 1998, and $2,681,858 for the same
period in 1997, an increase of $5,010,782. The current period includes
$4,858,937 of start-up and pre-opening costs related to seventeen of the
Company's newly developed communities and $668,446 of residence operating
expenses related to the acquisition of two stabilized communities, whereas the
1997 period included $559,764 of start-up and pre-opening costs related to
eleven newly developed communities and $130,124 of residence operating expenses
related to the acquisition of one stabilized community. Residence operating
expenses for the Company's five stabilized communities totaled 63.6 percent of
rental and service revenues for the three month period ended September 30, 1998,
and was 62.7 percent for the three month period ended September 30, 1997, for
four stabilized communities, one of which was acquired during the period.

General and Administrative Expenses. General and administrative expenses were
$1,258,457 for the three month period ended September 30, 1998, compared to
$871,058 for the three month period ended September 30, 1997. The increase of
$387,399 is due primarily to an increase in development activities and
operations, including payroll, travel, and other overhead related costs related
to the implementation of the Company's strategy for rapid growth.

Lease Expense. Lease expense for the Company's sixteen leased communities was
$2,687,297 for the three month period ended September 30, 1998, and was $914,776
for the Company's four communities leased during the same period in 1997. The
increase of $1,772,521 relates primarily to the opening of two newly developed
communities, the sale-leaseback of five newly developed communities and the
lease-acquisition of five communities, all of which have occurred since the end
of the third quarter of 1997.

Depreciation and Amortization. Depreciation and amortization expense was
$409,167 for the three month period ended September 30, 1998, compared to
$88,646 for the three month period ended September 30, 1997. The increase of
$320,521 relates primarily to the capitalization of buildings, furniture,
equipment and vans for newly developed communities.

Interest Income. Interest income decreased slightly in the three month period
ended September 30, 1998, to $76,634 from $83,290 for the same period in 1997.
Interest income resulted from the investment of cash and cash equivalents in
high quality, short term securities placed with institutions with high credit
ratings.

Page 11
<PAGE>
Interest Expense. Interest expense was $444,328 for the three month period ended
September 30, 1998. The Company reported no interest expense for the three
months ended September 30, 1997. The Company capitalized $531,471 and $523,390
of interest charges incurred during the three months ended September 30, 1998
and 1997, respectively. The capitalized interest offsets substantially higher
interest costs incurred by the Company in the current period arising from
increased borrowing for construction purposes and interest related to the
convertible subordinated notes.

Equity Interest in Joint Venture. For the three month period ended September 30,
1998, the Company reported a loss of $170,503 which is the primary result of
start-up and pre-opening costs related to one community in which the Company
owns less than a majority ownership interest.

Net Income (Loss). Net operating results decreased to a loss of $3,685,757
during the three month period ended September 30, 1998, from a loss of $881,732
for the same period in 1997. The decrease in net results is primarily due to an
increase in general and administrative expenses (as discussed above), an
increase in lease expense (as discussed above), an increase in interest expense
(as discussed above), an increase in depreciation expense (as discussed above),
offset by an increase in residence operating profits (rental and service revenue
less residence operating expenses) of $310,686.


Nine Months Ended September 30, 1998 Compared to Nine Months Ended September 30,
1997

Revenues. For the nine month period ended September 30, 1998, revenues increased
by $9,643,507 or 94.3% to $19,867,805 compared to $10,224,298 in the nine month
period ended September 30, 1997. The increase in revenue is related primarily to
revenue from newly developed and acquired communities. Overall average occupancy
at the Company's three communities that had stabilized occupancy at the
beginning of both periods decreased to 93.1 percent for the nine month period
ended September 30, 1998 from 93.4 percent for the same period in 1997.

Residence Operating Expenses. Residence operating expenses were $17,459,256 for
the nine month period ended September 30, 1998, and $7,015,759 for the same
period in 1997, an increase of $10,443,497. The current period includes
$9,799,971 of start-up and pre-opening costs related to seventeen of the
Company's new communities and $1,311,271 of residence operating expenses related
to the acquisition of two stabilized communities, whereas the 1997 period
included $804,892 of start-up and pre-opening costs related to eleven newly
developed communities and $130,124 of residence operating expenses related to
the acquisition of one stabilized community. Residence operating expenses
totaled 64.1 percent of rental and service revenues for the nine month period
ended September 30, 1998 for the Company's five stabilized communities, one of
which was acquired during the period, and 62.7 percent for the nine month period
ended September 30, 1997, for four stabilized communities, one of which was
acquired during the period.

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General and Administrative Expenses. General and administrative expenses were
$3,213,189 for the nine month period ended September 30, 1998, compared to
$2,233,909 for the nine month period ended September 30, 1997. The increase of
$979,280 is due primarily to an increase in development activities and
operations related to the implementation of the Company's strategy for rapid
growth.

Lease Expense. Lease expense for the Company's leased communities was $6,122,196
for the nine month period ended September 30, 1998, and was $2,403,127 for the
same period in 1997. The increase of $3,719,069 relates primarily to the opening
and sale-leaseback of newly developed communities and the lease-acquisition of
several additional communities.

Depreciation and Amortization. Depreciation and amortization expense was
$764,719 for the nine month period ended September 30, 1998, compared to
$235,494 for the nine month period ended September 30, 1997. The increase of
$529,225 primarily relates to the capitalization of buildings, furniture and
equipment and the purchase of vans for the Company's newly developed
communities.

Interest Income. Interest income decreased in the nine month period ended
September 30, 1998, to $232,556 from $305,881 for the same period in 1997, a
decrease of $73,325.

Interest Expense. Interest expense increased in the nine month period ended
September 30, 1998, to $939,340 from $101,228 for the nine month period ended
September 30, 1997. The Company capitalized $2,288,321 and $895,582 of interest
charges incurred during the nine months ended September 30, 1998 and 1997,
respectively.

Equity Interest in Joint Venture. For the nine month period ended September 30,
1998, the Company reported a loss of $203,560 which is the primary result of
start-up and pre-opening costs related to one community in which the Company
owns less than a majority ownership interest.

Net Income (Loss). Net operating results decreased to a loss of $8,616,642
during the nine month period ended September 30, 1998, from a loss of $1,421,998
for the same period in 1997. The decrease in net results is primarily due to an
increase in general and administrative expenses (as discussed above), an
increase in lease expense (as discussed above), an increase in depreciation
expense (as discussed above), an increase in interest expense (as discussed
above), and a decrease in residence operating profits (rental and service
revenue less residence operating expenses) of $803,615.


Liquidity and Capital Resources

At September 30, 1998, the Company had approximately $1.0 million of working
capital compared to a working capital deficit of approximately $4.3 million at
December 31, 1997. The increase of $5.3 million is the result of $9 million in
proceeds from the issuance by the Company of convertible subordinated notes, as
described below, $10.7 million of net proceeds from financing arrangements,
offset by a $7.8 million net loss from operations adjusted for non-cash items
and $30.2 million of expenditures related to development activities offset by
$23.6 million in additional long term indebtedness.

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Net cash used in operating activities totaled $6,262,516 for the nine month
period ended September 30, 1998, which resulted primarily from a net loss of
$8,616,642, adjusted for depreciation and amortization of $764,719, and an
increase in accounts payable and other accrued expenses of $1,685,431. The
increase in accounts payable and other accrued expenses is attributable to the
increase in the number of communities under operation.

Net cash used in investing activities totaled $30,187,582 for the nine month
period ended September 30, 1998, substantially all of which was used for land
acquisition, development and construction costs. At September 30, 1998, the
aggregate purchase price for the Company's options related to seven parcels of
land was approximately $5.5 million. The Company has paid initial deposits
relating to these sites and is in the process of completing the demographic
analysis and other preliminary due diligence necessary to develop assisted
living communities at these sites.

Net cash provided by financing activities totaled $38,480,774 during the nine
month period ended September 30, 1998, consisting of construction and equipment
financing proceeds totaling $23,590,924, proceeds from financing arrangements
totaling $43,021,272, proceeds from issuance of convertible subordinated notes
of $9,000,000, offset by repayment of short-term borrowings of $4,500,000,
repayment of long-term debt of $31,488,217, prepayments and deposits for
financing arrangements of $762,524, and payment of preferred stock dividends of
$450,000.

During the remainder of 1998, the Company intends to utilize current working
capital resources to develop and construct assisted living communities including
stand-alone Alzheimer's care communities. The Company intends to finance a
substantial portion of the cost of developing each new community through
additional sale-leaseback transactions with real estate investment trusts
("REIT"), joint venture arrangements, as well as conventional financing with
commercial banks and other financial institutions.

The Company has an aggregate of $11.2 million in loans from which it will
construct the Scottsdale and Modesto communities. As of September 30, 1998,
approximately $6.9 million remains to be drawn on these loans to fund
construction activities and debt service reserves. The Company has signed a
letter of intent with a REIT pursuant to which the Company intends to sell its
Clackamas, Corvallis, Las Vegas and Mesa sites to the REIT, construct
communities on each site for the REIT, and lease the communities from the REIT
upon their completion. The same commitment provides for the sale-leaseback of
the Company's Henderson and Austin communities. The Company also is currently
discussing with commercial banks and REITs the terms of potential financing with
which the Company will construct new communities currently under development.
Each of the pending financing transactions is subject to a number of conditions,
including the negotiation and execution of definitive documents and the
satisfactory completion of due diligence on the related properties, and there is
no assurance that any of these financing transactions will be completed on the
terms proposed, or at all.

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On March 30, 1998, the Company completed a private placement pursuant to which
parties purchased an aggregate of $4.5 million of convertible subordinated notes
of the Company and agreed to purchase up to an additional aggregate amount of $6
million of convertible subordinated notes. As of November 12, 1998, a total of
$9.0 million of convertible subordinated notes have been issued under this
facility. Subject to final documentation, the Company and the purchasers have
agreed that no additional notes will be issued. The notes bear interest at 7.5
percent per annum and are convertible into the Company's common stock at an
effective price of $7.50 per share. Interest on the notes is payable quarterly
and all principal and unpaid interest on the notes is due March 31, 2008.

The Company anticipates capital expenditures for the remainder of 1998 will
include additional land acquisition costs, architectural fees, and other
development costs related to at least 19 assisted living communities and
construction costs related to at least six new assisted living communities.

The Company currently anticipates completing construction on three new Regent
communities and four new Regent Court communities in 1999. Previously, the
Company announced that it intended to complete construction on nine new Regent
communities and five new Regent Court communities in 1999. The Company has
revised its plan due to delays experienced with obtaining building permits and
other governmental approvals for some of its sites, and delays in closing
construction financing. The total cost to develop and construct the seven
communities planned for 1999, including the estimated initial operating
deficits, will be approximately $41 million. The Company has obtained financing,
or commitments for financing, necessary to complete five of these communities.
The Company anticipates that it will be able to obtain the financing, upon
acceptable terms, necessary to complete the remaining two communities planned
for 1999. Provided that the Company can obtain financing upon acceptable terms,
the Company estimates that it has the necessary equity capital to complete
construction and to fund the initial operating deficits of the seven communities
planned for 1999.

The Company may enter into additional arrangements with one or more unrelated
parties regarding the joint development and ownership of one or more of the
Company's communities currently under construction or development in order to
further leverage the Company's growth. Furthermore, the Company may utilize
various forms of financing that would permit a community to be sold to or
initially be developed by a third party who would incur the initial operating
deficits and permit the Company to manage the community for a customary fee. The
Company, under such financing methods, would likely have the option to either
purchase the community or enter into a long-term lease at such time as the
Company deems appropriate. The Company has not obtained any commitments for this
form of financing.

If the Company were unable to obtain additional required financing, or if such
financing is not available on acceptable terms, the Company expects that its
plan to develop an additional five Regent Communities and four Regent Court
communities by the end of 1999 would likely be delayed or curtailed.
Furthermore, if the Company expands its growth plan, development activities do
not result in the construction of a community on the site, the Company
experiences a decline in the operations of its current communities or the
Company does not achieve and sustain anticipated occupancy levels at its new
communities, then the Company may require additional financing to complete its
growth plan.

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Year 2000 Disclosure

"Year 2000 issues" relate to the result of computer programs having been written
using two digits rather than four to define the applicable year. Computer
programs and electronic devices that utilize date sensitive software or
information may recognize a date using the "00" as the year 1900 rather than the
year 2000. This recognition could result in a system failure or miscalculations
causing disruptions of operations or the inability of suppliers of material
services and products to continue supporting the Company's operations.

The Company has assessed its readiness in regard to Year 2000 issues. The
Company believes that all material hardware and software utilized in its
operations and, specifically, in its accounting systems, is Year 2000 compliant
or that Year 2000 compliant versions are available to the Company for
installation during the normal course of replacing or updating such systems
prior to November 30, 1999. The financial impact of any change is not
anticipated to be material to the financial position or results of the Company's
operations.

The Company believes it has adequate alternatives to counteract potential Year
2000 issues that may arise with its internally utilized software and hardware if
the assurances of relevant vendors are incorrect. The Company believes the
primary risks from Year 2000 issues to its operations and prospects are the
potential inability of the Company's commercial banks to permit access to the
Company's accounts and of utility companies to continuing supplying utilities to
the Company's communities. The Company does not have a contingency plan in
effect at this time to guard against such events.

The Company is in the process of obtaining Year 2000 compliance letters and
reports from suppliers of material services and products. To date, no such
supplier has indicated an inability to continue supplying material products and
services to the Company after January 1, 2000, although most are in the process
of evaluating and updating their internal systems and cannot yet assure the
Company that their systems are Year 2000 compliant. Accordingly, the Company
does not expect that Year 2000 issues will have a material adverse effect upon
the Company's operations or prospects. However, there can be no assurances that
the systems of other companies on which the Company's operations or systems rely
will be timely remediated or that a failure by another company to remediate its
systems in a timely manner would not have a material adverse effect on the
Company.

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Forward-Looking Statements

The information set forth in this report in the sections entitled "Overview" and
"Liquidity and Capital Resources" regarding the Company's acquisition of sites
for development, the Company's development, construction, financing and opening
of new assisted living communities, and the Company's plans to develop,
construct and operate new Regent Court communities constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
is subject to the safe harbor created by that section. The development of
additional assisted living communities will involve a number of risks including,
without limitation, the risk that the Company will be unable to locate suitable
sites, risks relating to the inability to obtain, or delays in obtaining,
necessary zoning, land use, building, occupancy and other required governmental
permits and authorizations, environmental risks, risks that construction costs
may exceed original estimates, risks that construction and lease-up may not be
completed on schedule, and risks relating to the competitive environment for
development. The foregoing risks could cause the Company to significantly delay
or curtail its planned growth and could cause one or more of the Company's new
communities to not be profitable. Additional factors that could cause results to
differ materially from those projected in the forward-looking statements
include, without limitation, the ability of the Company to raise additional
financing upon terms acceptable to the Company, the extent to which the
Company's efforts to obtain financing are affected by current liquidity issues
that have adversely impacted national and international financial markets,
increases in the costs associated with new construction, competition, and
acceptance of the Company's prototype community in new geographic markets. The
Company's growth strategy is subject to the risk that occupancy rates at
newly-developed communities may not be achieved or sustained at expected levels,
in which case, the Company will experience greater than anticipated operating
losses in connection with the opening of new communities and the Company's need
for additional financing to meet its growth plans will likely increase.
Furthermore, the Company's growth will place increasing pressure on the
Company's management controls and require the Company to locate, train,
assimilate, and retain additional community managers and support staff. There is
no assurance that the Company will be able to manage this growth successfully.

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PART II - OTHER INFORMATION


Item 5. Other Information.

In accordance with amendments adopted on May 21, 1998 to Rule 14a-4 under the
Securities Exchange Act of 1934, if notice of a shareholder proposal to be
raised at the annual meeting of shareholders is received at the principal
executive offices of the Company after March 15, 1999 (45 days prior to the
month and date in 1999 corresponding to the date on which the Company mailed its
proxy materials for the 1998 annual meeting), proxy voting on that proposal when
and if raised at the 1999 annual meeting will be subject to the discretionary
voting authority of the designated proxy holders. Any shareholder proposal to be
considered for the inclusion in proxy materials for the Company's 1999 annual
meeting must be received at the principal executive offices of the Company no
later than December 2, 1998.


Item 6. Exhibits and Reports on Form 8-K.

        Exhibits:

        27       Financial Data Schedule

        Reports on Form 8-K

        None


                                    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.

REGENT ASSISTED LIVING, INC.



By:------------------------------      Date:  November 12, 1998
   Steven L. Gish
   Chief Financial Officer

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                                  EXHIBIT INDEX


EXHIBIT NO.     EXHIBIT DESCRIPTION
-----------     -------------------

    27.         Financial Data Schedule