CATOOSA SENIOR VILLAGE, LP

                              FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003








<PAGE>


                           CATOOSA SENIOR VILLAGE, LP


                                TABLE OF CONTENTS


                                                                           PAGE


Independent auditors' report                                                   1

Financial statements:

      Balance sheets                                                           2

      Statements of operations                                                 3

      Statements of changes in partners' equity (deficit)                      4

      Statements of cash flows                                                 5

      Notes to financial statements                                        6 - 8

Supplemental information:

      Schedule of certain expenses                                       10 - 11





<PAGE>

                                     HA&W
              Certifield Public Accountants and Business Advisors


                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------




To the Partners
Catoosa Senior Village, LP

We have audited the accompanying balance sheets of CATOOSA SENIOR VILLAGE, LP (a
limited  partnership)  as of  December  31,  2004  and  2003,  and  the  related
statements of operations,  changes in partners' equity (deficit), and cash flows
for the years then ended.  These financial  statements are the responsibility of
the  Partnership's  management.  Our  responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits 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 CATOOSA SENIOR VILLAGE,  LP as
of December 31, 2004 and 2003, and the results of its operations, its changes in
partners'  equity  (deficit),  and its cash flows for the years then  ended,  in
conformity with accounting principles generally accepted in the United States of
America.

/s/Habif, Arogeti & Wynne, LLP

Atlanta, Georgia

February 28, 2005







                          Habif, Arogeti & Wynne, LLP
 Glenridge Highland Two* 5565 Glenridge Connector * Suit Atlanta, Georgia 30342
                404.892.9651 * Fax 404.876.3913 * WWW.hawcpa.com


An Independent Member of Baker Tilly International* Certified Public Accountants


<PAGE>


                           CATOOSA SENIOR VILLAGE, LP
                                 BALANCE SHEETS
                                  DECEMBER 31,

                                     ASSETS
<TABLE>
<CAPTION>

                                                                                           2004                   2003
                                                                                      ---------------       ---------------

Property and equipment, at cost
----------------------
<S>                                                                                <C>                   <C>
   Land                                                                             $      1,038,645      $      1,038,654
   Building                                                                                3,531,798                     0
   Equipment                                                                                 238,717               237,267
   Construction in progress                                                                        0             3,531,798
                                                                                      ---------------       ---------------
                                                                                           4,809,160             4,807,710
        Accumulated depreciation                                                            (201,107)               50,277
                                                                                      ---------------       ---------------

                                                                                           4,608,053             4,757,433
                                                                                      ---------------       ---------------

Other assets
------------
   Cash, operating                                                                            67,140                22,872
   Cash, tax and insurance                                                                    29,894                23,041
   Accounts receivable                                                                             1                    19
   Tenant security deposits                                                                   16,564                17,876
   Prepaid expenses                                                                            7,608                 6,339
   Monitoring fee, net of accumulated amortization
       $2,507 and $627 for 2004 and 2003, respectively                                        25,693                27,573
   Operating deficit reserve                                                                 103,009                86,731
                                                                                      ---------------       ---------------

                                                                                             249,909               184,451
                                                                                      ---------------       ---------------

                                                                                         $ 4,857,962             4,941,884
                                                                                      ===============       ===============

                   LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
                   ------------------------------------------


Current liabilities
-------------------
   Accounts payable and accrued expenses                                            $            552      $          3,634
   Current portion long term debt                                                             17,480                     0
   Construction loan payable                                                                       0             2,382,000
   Prepaid rents                                                                                   1                 3,371
   Tenant security deposits                                                                   16,564                17,876
                                                                                      ---------------       ---------------

        Total current liabilities                                                             34,597             2,406,881
                                                                                      ---------------       ---------------

Long-term debt
--------------
   Due to developer                                                                           98,831               574,000
   State Home Mortgage                                                                     2,348,636                     0
                                                                                      ---------------       ---------------

                                                                                           2,447,467               574,000
                                                                                      ---------------       ---------------
Partners' equity (deficit)                                                                 2,375,898             1,961,003
-------------------------                                                             ---------------       ---------------

                                                                                    $      4,857,962       $     4,941,884
                                                                                      ===============       ===============
</TABLE>


                   See auditors' report and accompanying notes

                                       -2-

<PAGE>



                           CATOOSA SENIOR VILLAGE, LP
                            STATEMENTS OF OPERATIONS
                        FOR THE YEARS ENDED DECEMBER 31, 2004
<TABLE>
<CAPTION>

                                                                                           2004                   2003
                                                                                      ---------------       ----------------

<S>                                                                                       <C>               <C>
Income from rental operations
-----------------------------
   Gross rent potential                                                             $        219,170       $         91,879
   Vacancies and rental concessions                                                           (3,801)                (2,943)
   Other rental income                                                                           520                     22
                                                                                      ---------------       ----------------
                                                                                             215,889                 88,958
                                                                                      ----------------      ----------------
Operating expenses
------------------
   Administrative and marketing                                                                2,064                  2,072
   Management fees                                                                            21,731                  8,494
   Repairs and maintenance                                                                    39,423                 16,364
   Utilities                                                                                  19,801                  5,983
   Real estate taxes                                                                          24,632                  1,765
   Insurance                                                                                   9,608                  9,198
   Administrative                                                                             39,999                 33,045
                                                                                      ---------------         --------------

                                                                                             157,258                 76,921
                                                                                      ---------------         --------------


        Net operating income                                                                  58,631                 12,037
                                                                                      ---------------         --------------


Other income (expenses)
-----------------------                                                                          961                     49
   Interest income                                                                             (1880)                  (627)
   Amortization                                                                             (150,830)               (50,277)
   Depreciation                                                                              (21,769)                     0
   Interest                                                                           ---------------         -------------

                                                                                            (173,518)               (50,855)
                                                                                      ---------------         -------------

        Net loss                                                                    $       (114,887)      $        (38,818)
                                                                                      ===============         =============
</TABLE>


                   See auditors' report and accompanying notes

                                       -3-




<PAGE>


                           CATOOSA SENIOR VILLAGE, LP
               STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
<TABLE>
<CAPTION>


                                                            General                      Limited
                                                            Partners                     Partners               Total
                                                       --------------                   ------------          ------------


<S>                                                    <C>                              <C>                   <C>
Partner's equity (deficit),
     December 31, 2002                                 $         10                    $  1,632,504          $  1,632,514




Contributions                                                     0                         367,307               367,307




Net income (loss)                                              (388)                        (38,430)              (38,818)
                                                         --------------                   ------------          ------------




Partners' equity (deficit)
     December 31, 2003                                         (378)                       1,961,381             1,961,003




Contributions                                                     0                          529,782               529,782




Net income (loss)                                            (1,149)                        (113,738)             (114,887)
                                                         --------------                  ------------          ------------




Partners' equity (deficit)
     December 31, 2004                                 $     (1,527)                   $  2,377,425          $  2,375,898
                                                         ==============                  ============          ============
</TABLE>

                   See auditors' report and accompanying notes

                                       -4-
<PAGE>

                           CATOOSA SENIOR VILLAGE, LP
                             STATEMENT OF CASH FLOWS
                        FOR THE YEARS ENDED DECEMBER 31,

                           Increase (Decrease) In Cash
<TABLE>
<CAPTION>

                                                                                              2004                 2003
                                                                                        ---------------       -------------
<S>                                                                                     <C>                   <C>
Cash flows from operating activities
   Net income (loss)                                                                   $    (114,887)         $    (38,818)
                                                                                        ---------------       -------------
        Adjustments to reconcile net income (loss) to
           net cash provided (used) by operating activities
              Amortization                                                                     1,880                   627
              Depreciation                                                                   150,830                50,277
              Change in accounts receivable                                                       18                   (19)
              Change in prepaid expenses                                                      (1,269)               (6,339)
              Change in accounts payable and accrued expenses                                 (3,082)             (143,028)
              Change in prepaid rent                                                          (3,370)                3,371
              Change in other accruals                                                             0              (288,262)
                                                                                        ---------------       -------------

                  Total adjustments                                                          145,007              (383,373)
                                                                                        ---------------       -------------

                      Net cash provided (used) by operating activities                        30,120              (422,191)
                                                                                        ---------------       -------------

Cash flow from investing activities
   Investment in rental property                                                              (1,450)             (542,849)
   Investment in monitoring fees                                                                   0               (28,200)
   Net (deposits) releases to/from tax and insurance escrow                                   (6,853)              (23,041)
   Net (deposits) release to/from operating reserve                                          (16,278)              (86,731)
                                                                                        ---------------       -------------

        Net cash provided (used) by investing activities                                     (24,581)             (680,821)
                                                                                        ---------------       -------------

Cash flows from financing activities
   Proceeds from issuance of construction loan                                                     0               732,333
   Principal payment on State Home loan                                                      (15,884)                    0
   Payment to developer                                                                     (475,169)                    0
   Capital contribution                                                                      529,782               367,307
                                                                                        ---------------       -------------

        Net cash provided (used) by financing activities                                      38,729             1,099,640
                                                                                        ---------------       -------------

              Net increase (decrease) in cash                                                 44,268                (3,372)

Cash, beginning of year                                                                       22,872                26,244
                                                                                        ---------------       -------------

              Cash, end of year                                                        $      67,140          $     22,872
                                                                                        ===============       =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

                                                                                               2004                 2003
                                                                                         ---------------      ---------------

Cash paid during the years for interest on mortgage                                    $      21,769          $          0
                                                                                         --------------       ----------------
</TABLE>



                   See auditors' report and accompanying notes

                                       -5-

<PAGE>



                           CATOOSA SENIOR VILLAGE, LP
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003


Note A
Organization and Summary of Significant Accounting Policies
-----------------------------------------------------------

Catoosa  Senior  Village,  LP  (the  Partnership)  was  organized  as a  limited
partnership  under the laws of the state of Georgia in 2001. The Partnership was
formed  to  develop,   construct,   own,   maintain   and  operate  a  low-  and
moderate-income apartment complex known as Catoosa Senior Village (the Project),
a 60-unit rental project located in Calhoun, Georgia.

The  following  significant  accounting  policies  have  been  followed  in  the
preparation of the financial statements:

a. Basis of Accounting:
   --------------------

     The  financial  statements of the  Partnership  are prepared on the accrual
     basis of accounting and in accordance  with generally  accepted  accounting
     principles.

b.   Tenant Rent Receivables:
     ------------------------

     Management  considers  tenant  rent  receivables  to be fully  collectible;
     accordingly, no allowance for doubtful accounts is required.  Uncollectible
     rent receivables are charged to operations upon management's  determination
     that collection of the receivable is unlikely.

c.   Use of Estimates:
     -----------------

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

d.   Rental Property:
     ----------------

     Property and equipment have been recorded at cost. Depreciation is provided
     for in  amounts  sufficient  to relate  the cost of  depreciable  assets to
     operations  using the  straight-line  method over their  estimated  service
     lives of 40 years for  buildings,  10 years for  equipment and 15 years for
     land improvements.

     Maintenance and repairs are charged to expense as incurred;  major renewals
     and  betterments are  capitalized.  When items of property or equipment are
     sold or retired, the related cost and accumulated  depreciation are removed
     from the accounts, and any gain or loss is included in income.

e.   Income Taxes:
     -------------

     Income or loss of the  Partnership is allocated .01% to the general partner
     and  99.99% to the  limited  partners.  No income  tax  provision  has been
     included  in  the  financial   statements  since  income  or  loss  of  the
     Partnership is required to be reported by the partners on their  respective
     income tax returns.

                                      -6-
<PAGE>



                           CATOOSA SENIOR VILLAGE, LP
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003


f.   Rental income:
     --------------

     Rental income is recognized for  residential  units as they accrue.  Rental
     payments received in advance are deferred until earned.  All leases between
     the Partnership and tenants of the property are operating leases.

g.   Amortization:
     -------------

     Compliance  monitoring fees are being amortized on the straight-line method
     of 15 years,  which  approximates the effective yield, over the life of the
     related loans.

Note B
Construction Loan Payable
-------------------------

Georgia Department of Community Affairs:

The  Partnership  secured a  construction  loan of  $2,382,000  from the Georgia
Department  of  Community  Affairs for the  purpose of funding the  construction
costs of the  Project.  The loan  accrues  interest at 0.00% per annum until the
conversion date, the construction  loan maturity date. If the construction  loan
is converted to a permanent  loan when the interest  rate will be 1% computed on
basis of a 360-day year. The note is  collateralized by a deed to secure debt on
rental property.

Note C
Mortgage Payable
----------------
<TABLE>
<CAPTION>
                                                                                     2004             2003
                                                                                -------------    ------------
<S>                                                                            <C>              <C>
The Partnership  has a   mortgage note  with   the   Georgia
department  of   Community Affairs ( State   Home  Bank)  in
the original  amount  of  $817,000  secured  by  a  deed  of
trust on the rental property. The mortgage bears an interest
rate of 1% per annum with monthly  installments of $3,423.01
for 240 months maturing March 1, 2024.                                          $ 2,366,116      $          0

Aggregate  annual  maturities  for the notes  payable over each of the next five
years are as follows:

             December 31                                                                     Amount
            -------------                                                           -----------------------

               2005                                                                                 $17,480
               2006                                                                   17,656
               2007                                                                   17,833
               2008                                                                   18,012
               2009                                                                   14,541
               2010 - thereafter                                                   2,280,594
                                                                                   ---------
                                                                                                    2,348,636
                                                                                                    ---------
                                                                                                  $ 2,366,116
                                                                                                    ---------
</TABLE>
Note D
Development Fees
----------------

The  developer,  an affiliate of the general  partner of the  Partnership,  will
receive a developer's  fee of $574,000 for its services  during the  development
and  construction  of the  Project.  The fee is to be paid  in  installments  as
defined in the development agreement. As of December 31, 2004  and 2003, $98,831
and  $574,000,  respectively,  of this fee  remained  payable  at year  end. The
developer's fee has been capitalized into the building basis.

Note E
Partnership Profits, Losses and Distributions
---------------------------------------------

Operating  profits and losses are allocated  99.99% to the limited  partners and
..01% to the  general  partner.  Tax credits  are to be  allocated  99.99% to the
limited  partners  and  .01% to the  general  partner.  Profit  or loss and cash
distributions  from sales of property  will be  allocated as  formulated  in the
partnership agreement.


                                      -7-

<PAGE>

Note F
Commitments and Contingencies
-----------------------------

The  Partnership's  low-income  housing  credits are  contingent on the Projects
ability to maintain  compliance with applicable  sections of Section 42. Failure
to maintain compliance with occupant  eligibility,  and/or unit gross rent or to
correct  noncompliance  within a specified time period could result in recapture
of  previously  taken tax credits plus  interest.  In addition,  such  potential
noncompliance  may  require  an  adjustment  to the  contributed  capital by the
limited partner.

                                      -8-

<PAGE>



                            SUPPLEMENTAL INFORMATION







<PAGE>




                           CATOOSA SENIOR VILLAGE, LP
                          SCHEDULES OF CERTAIN EXPENSES
                   FOR THE YEARS ENDED DECEMBER 2004 AND 2003
<TABLE>
<CAPTION>

                                                                                             2004                 2003
                                                                                        ---------------    -----------------
<S>                                                                                    <C>               <C>
Revenue
   Gross rental revenue                                                                 $    219,170       $         91,879
   Less: Vacancies                                                                            (3,801)                (2,943)
   Less: Miscellaneous                                                                             0                      0
                                                                                        ---------------     ----------------

       Subtotal                                                                              215,369                 88,936

Vacancy percentage                                                                             1.73%                  3.02%

Tenant late fees                                                                                  50                      0
Tenant charges for damages                                                                       468                      0
Interest income                                                                                  961                     49
Miscellaneous income                                                                               2                     22
                                                                                        ---------------    -----------------

        Total revenue                                                                        216,850                 89,007
                                                                                        ---------------    -----------------

EXPENSES
   Advertising                                                                                 2,064                  2,072
   Professional fees                                                                           5,090                    275
   Office expenses                                                                             2,776                  3,557
   Office furniture and equipment                                                                  0                  8,788
   Other854                                                                                    4,906                    795
   Payroll taxes                                                                               3,870                  2,794
   Telephone                                                                                   5,462                  4,023
   Travel                                                                                        737                    468
                                                                                                 660                     60
                                                                                        ---------------    -----------------

        General and administrative subtotal                                                   25,565                 22,832
                                                                                        ---------------    -----------------

Cable                                                                                            387                     26
Decorating/improvements                                                                        1,000                      0
Garbage and trash                                                                                761                  1,246
Electric                                                                                       2,613                  1,218
Insurance                                                                                     12,517                  3,650
Grounds                                                                                        9,608                  9,198
Maintenance                                                                                    7,105                  3,049
Payroll                                                                                        4,588                    813
Pest control                                                                                  22,200                  9,872
Security                                                                                       1,155                     33
Water and sewer                                                                                    0                    132
Real estate taxes                                                                              6,897                  2,307
Manager payroll                                                                               24,632                  1,765
Management fee                                                                                16,499                 12,286
                                                                                              21,731                  8,494
                                                                                        ---------------    -----------------

   Operating expenditure subtotal                                                            131,693                 54,089
                                                                                        ---------------    -----------------

        Total expenses                                                                       157,258                 76,921
                                                                                        ---------------    -----------------

   Net operating income                                                                 $     59,592       $         12,086
                                                                                        ===============    ==================

   Replacement reserve                                                                  $          0       $              0
                                                                                        ---------------    ------------------

   Income to service debt                                                               $     59,592       $         12,086
                                                                                        ---------------    -----------------
 Debt Service #1                                                                        $     37,653                      0
                                                                                        ---------------    -----------------
</TABLE>

                   See auditors' report and accompanying notes

                                       -10-

<PAGE>



                           CATOOSA SENIOR VILLAGE, LP
                          SCHEDULES OF CERTAIN EXPENSES
                   FOR THE YEARS ENDED DECEMBER 2004 AND 2003
<TABLE>
<CAPTION>

                                                                                            2004                   2003
                                                                                      -----------------      ---------------
Summary of Operating and Administrative Expenses
------------------------------------------------
<S>                                                                                  <C>                     <C>
    General and administrative                                                       $         25,565        $       22,832
                                                                                      -----------------      ---------------
    Utilities                                                                                  22,414                 7,201
                                                                                      -----------------      ---------------
    Payroll                                                                                    38,699                22,290
                                                                                      -----------------      ---------------
    Maintenance                                                                                14,609                 5,141
                                                                                      -----------------      ---------------
    Management fees                                                                            21,731                 8,494
                                                                                      -----------------      ---------------
    Tax                                                                                        24,632                 1,765
                                                                                      -----------------      ---------------
    Insurance                                                                                   9,608                 9,198
                                                                                      -----------------      ---------------
        Total expenses                                                               $        157,258        $       76,921
                                                                                      =================      ===============
Revenue growth rate                                                                              144%                   NA%
Expense growth                                                                                   104%                   NA%
    Total number of units 60                      Per-unit replacement reserve       $              0        $            0
                                                                                      -----------------      ---------------
</TABLE>





                                      -11-