<PAGE>
                                  UNITED STATES

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

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934
         For the fiscal year ended September 30, 2001
                           OR
[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934
                 For the transition period from __________ to ___________
                        Commission file number 000-25313

                               AGEMARK CORPORATION
                 (Name of small business issuer in its charter)

                   Nevada                                    94-3270169
      (State or Other Jurisdiction of                     (I.R.S. Employer
       Incorporation or Organization)                    Identification No.)

           2614 Telegraph Avenue
                Berkeley, CA                                    94704
  (Address of Principal Executive Offices)                   (ZIP Code)

                    Issuer's telephone number: (510) 548-6600

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

         Securities registered pursuant to Section 12(g) of the Act: Common
Stock, par value $.001 per share

         Check whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
[X]  No [ ]

         Check if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained in this form, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

         State issuer's revenues for its most recent fiscal year:  $10,960,000

         State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days. $769,330; based on a
per-share market value of $1.00 as determined by the Board of Directors of the
issuer.

         Check whether the issuer has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [X]  No
[ ]

         At December 21, 2001, there were 1,000,000 shares of common stock, par
value $.001 per share, of the registrant issued and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                 Not Applicable.

         Transitional Small Business Disclosure Format (check one): Yes [ ]
No [X]
<PAGE>
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                 Page
<S>                                                                                                              <C>
PART I............................................................................................................3

     Item 1. DESCRIPTION OF BUSINESS..............................................................................3

     Item 2. DESCRIPTION OF PROPERTY.............................................................................14

     Item 3. LEGAL PROCEEDINGS...................................................................................15

     Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................................................15


PART II..........................................................................................................15

     Item 5. MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS.............................................15

     Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION...........................................16

     Item 7. FINANCIAL STATEMENTS................................................................................21

     Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE................40


PART III.........................................................................................................40

     Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
       16(A) OF THE EXCHANGE ACT.................................................................................40

     Item 10. Executive Compensation.............................................................................41

     Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.....................................42

     Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................................................43

     Item 13. FINANCIAL STATEMENTS AND EXHIBITS..................................................................45
</TABLE>
<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

         Agemark Corporation (the "Company") owns and operates assisted living
residences, which offer a combination of housing and personalized services for
senior citizens who can no longer live independently but who do not require the
24-hour medical care provided by a skilled nursing facility. The Company
operates 8 properties located in non-urban, secondary markets in five states.
The Company's primary focus is on "private pay" residents, who generally pay for
the Company's services from their own funds, with the help of other family
members or through private insurance. The Company was incorporated in Nevada in
April 1997 and commenced operations in January 1998 pursuant to the Plan of
Reorganization discussed below.

BACKGROUND AND FORMATION OF THE COMPANY; PLAN OF REORGANIZATION

         Between 1987 and 1989, Westor Financial Group, Inc., now, Opus X Inc.
("Opus"), established Historic Housing for Seniors Limited Partnership, Historic
Housing for Seniors II Limited Partnership, Historic Housing for Seniors III
Limited Partnership (collectively, the "HHS Partnerships"), and Housing for
Seniors Participating Mortgage Fund Limited Partnership ("PIF I" and, together
with the HHS Partnerships, the "Partnerships"). The Partnerships were Delaware
limited partnerships, the securities of which were registered under the
Securities Exchange Act of 1934 (the "Exchange Act"). The HHS Partnerships owned
a portfolio of real properties throughout the United States that were operated
as housing facilities for senior citizens. PIF I, together with similar
partnerships sponsored by Opus (collectively, the "PIF Partnerships"), made
mortgage loans to the HHS Partnerships and owners of other such facilities. Opus
served as general partner for each of the Partnerships. Evergreen Management,
Inc. ("Evergreen"), a corporation owned by the principals of Opus, managed the
operations of the housing facilities owned by the Partnerships pursuant to
management agreements with those entities.

         The operating performance of the HHS Partnerships did not reach
feasibility standards and pro forma expectations and by the early 1990s, due to
a variety of factors, the HHS Partnerships were unable to meet the debt service
demands of the PIF Partnerships. Factors that affected the businesses of the
housing facilities owned by the HHS Partnerships included higher resident
turnover than had been expected, slower rent up to full occupancy than
anticipated, higher expenses than anticipated and changes in tenants' needs due
to their deteriorating health. The decline in commercial and residential real
estate and the nationwide economic downturn adversely affected each HHS
Partnership's ability to lease its facilities in the time frame that was
originally anticipated by feasibility studies conducted by third parties on
behalf of the HHS Partnerships. Depressed home sales in many markets made it
difficult for potential residents to sell their homes, which adversely affected
their financial ability to be able to move into a senior citizen housing
facility. An additional factor affecting adversely the overall occupancy rates
and net income stream of the HHS Partnerships' housing facilities was a much
higher than anticipated turnover rate due to the age and frailty of the
residents and lower profit margins resulting from more intensive service
required to retain the frail elderly tenants who moved in. As a


                                       3
<PAGE>
result, occupancies and income available for debt service at the HHS
Partnerships' facilities were below the level required to fund both the property
operating expenses and full mortgage payments.

         In September 1993, the Partnerships filed voluntary petitions for
relief under Chapter 11 of the United States Bankruptcy Code. In May 1994, the
HHS Partnerships proposed a plan of reorganization that was not confirmed, in
part because the court-appointed liquidating trustee for the PIF Partnerships
other than PIF I objected to the plan pending his further investigation of the
operations of Opus, the HHS Partnerships and the PIF Partnerships. In January
1997, the Partnerships proposed a Second Amended Joint Plan of Reorganization
(as amended and confirmed, the "Plan of Reorganization") that was supported by
the liquidating trustee of the other PIF Partnerships. The Plan of
Reorganization was confirmed by the United States Bankruptcy Court for the
Northern District of California on April 29, 1997. The Plan of Reorganization
was declared effective on September 30, 1998.

         In accordance with the Plan of Reorganization, the Company was
incorporated under the laws of Nevada in April 1997. Some of the facilities
owned by the HHS Partnerships were transferred to the Company pursuant to the
Plan of Reorganization. According to a study conducted in connection with the
formulation of and whose conclusions are included in the Plan of Reorganization,
these facilities were deemed to have the strongest long-term potential for
generating cash flow adequate to support ongoing debt or were needed to secure
certain obligations arising from previous loans. Additionally, two affiliated
limited partnerships of Opus, Dickinson Associates, L.P. and Williston
Associates, L.P., contributed two facilities located in Dickinson, North Dakota
and Williston, North Dakota, respectively, to the Company. Both Dickinson
Associates, L.P. and Williston Associates, L.P. were owned by the individuals
who now comprise the Company's senior management. In consideration for these
facilities, and in satisfaction of certain claims, the Company issued shares of
Common Stock to the Partnerships and the Opus-affiliated limited partnerships.
The Partnerships were dissolved and their equity interests in the Company were
distributed to their respective limited partners. The secured debt on the
Company's facilities was also reduced and modified pursuant to the Plan of
Reorganization. In addition, pursuant to the Plan of Reorganization, the Company
entered into amended management agreements with Evergreen, providing for reduced
fees compared to the agreements with the Partnerships. See Item 12 -- "Certain
Relationships and Related Transactions" below. The Company also assumed all
assets and liabilities of the Partnerships that were not otherwise disposed of
pursuant to the Plan of Reorganization.

         The following table sets forth certain information with respect to the
properties that were acquired by the Company pursuant to the Plan of
Reorganization, including a breakdown of the assets and debt that were assumed
by the Company in respect of each property.

         The following is a summary of the properties transferred to the Company
and the adjustments made to historical values to arrive at values approved by
the Bankruptcy Court pursuant to the Plan of Reorganization:

                                       4
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                        (Amounts in thousands of dollars)
<TABLE>
<CAPTION>
                                                         Accumulated      Net Book
                        Transferred         Historical   Depreciation       Value          Write Up    Plan of Reorg.
Property Location          From               Value        12/31/97        12/31/97         (Down)         Value
-----------------       -----------         ----------   ------------      --------         ------     -------------
<S>                     <C>                 <C>          <C>              <C>              <C>         <C>
Beatrice, NE              HHS I             $  2,742       $   888         $  1,854        $  (618)      $  1,236
Cumberland, MD            HHS I                2,188           635            1,553          2,315          3,868
Hastings, NE              HHS I                3,211         1,120            2,091            198          2,289
Chanute, KS               HHS II               2,602           750            1,852           (901)           951
Rock Island, IL           HHS II               4,345         1,212            3,133           (735)         2,398
Fort Madison, IA          HHS III              3,460           781            2,679           (464)         2,215
Manitowoc, WI             HHS III              3,642           693            2,949         (2,154)           795
Port Huron, IL            PIF I                1,090             0            1,090             86          1,176
Dickinson, ND             Private              1,380           380            1,000          1,273          2,273
Williston, ND             Private              1,932           538            1,394          2,978          4,372
                                            --------     ---------          -------         ------        -------
                                             $26,592        $6,997          $19,595         $1,978        $21,573
                                            ========     =========          =======         ======        =======
</TABLE>

         In connection with the transfers of the facilities, the Company also
assumed various notes payable. The following is a summary of the notes payable
assumed by the Company:

                        (Amounts in thousands of dollars)
<TABLE>
         <S>                                                                                           <C>
         Carrying value of notes (including accrued interest) by the Partnerships                      $24,186
         Less forgiveness of debt recognized by the Partnerships                                         8,595
         Notes payable assumed by the Company                                                           15,591
</TABLE>

THE SENIOR CARE INDUSTRY

         The senior care industry is characterized by a wide range of living
accommodations and health care services. For those who are able to live in a
home setting, home health care and other limited services can be an appropriate
alternative. Community housing or retirement centers, which are commonly
referred to as independent living facilities, are also available to persons who
need modest assistance, such as with meal preparation, housekeeping and laundry.
Assisted living facilities are typically for those persons whose physical or
cognitive frailties have reached a state where independent living accommodations
can no longer provide the level of care required. These people do not need the
continuous medical attention of a skilled nursing facility. Generally, assisted
living facilities provide a combination of housing and 24-hour personal support
services designed to assist seniors with activities of daily living ("ADLs"),
which include bathing, eating, personal hygiene, grooming, ambulating and
dressing. Certain assisted living facilities also offer higher levels of
personal assistance for residents with Alzheimer's disease or other forms of
dementia but always in a "residential," as compared with a "medical," setting.
Skilled nursing facilities provide care in a comparatively institutional
environment. Assisted living residences provide a "homelike" atmosphere. For
example, the Company's facilities feature carpeted floors compared with the
linoleum typically found in nursing home, and single-occupancy rooms.
Additionally, assisted living residences operated by the Company encourage
residents to bring their own, more familiar furniture, serve meals in dining
rooms and provide a wide range of social programs including outings to shows,
museums, movies and the like.

         The senior care industry, including assisted living, is highly
fragmented and characterized by numerous providers whose services, experience
and capital resources vary widely. The


                                       5
<PAGE>
Company believes that the assisted living industry is evolving as the preferred
alternative to meet the growing demand for a cost-effective setting for those
seniors who cannot live independently due to physical or cognitive frailties,
but who do not require the more intensive medical attention provided by a
skilled nursing facility. According to the United States Bureau of the Census,
approximately 45% of persons aged 85 years and older, approximately 24% of
persons aged 80 to 84 and approximately 20% of persons aged 75 to 79 need
assistance with ADLs.

         The Company believes that a number of factors will contribute to the
continued growth of the assisted living industry, including:

         Cost Effectiveness. The Company believes that assisted living
facilities provide a cost effective alternative to other types of facilities
that may provide more care than many seniors need. Additionally, the Company
also believes that the cost of assisted living services compares favorably with
home health care, particularly when costs associated with housing, meals and
personal care assistance are taken into consideration.

         Changing Income and Family Structures. The Company believes that the
increased affluence of the current elderly population and changing family
structures will feed the demand for assisted living and health care services.
The Company believes that cumulative gains in stock prices and rising real
estate values over the past few decades has contributed to increased affluence
in the elderly population. Accordingly, the Company believes that the number of
seniors who are able to afford high-quality senior residential services such as
those offered by the Company will also increase. Additional factors affecting
the demand for assisted senior living arrangements include the past decade's
increase in the number of two-income households and rise in geographical
separation of senior family members from their adult children caused by
work-related moves. Many families that traditionally would have provided the
care and services offered by the Company to senior family members are less able
to do so now than in the past. The Company believes that assisted living
facilities represent an attractive and independent environment for senior family
members.

         Demographics. The target market for the Company's services are persons
75 years and older, one of the fastest growing segments of the United States
population. According to the United States Bureau of the Census, the portion of
the United States population aged 75 and older is expected to increase by
approximately 29%, from approximately 13.0 million in 1990 to approximately 16.8
million by the year 2000. The number of persons aged 85 and older, as a segment
of the United States population, is expected to increase by approximately 43%,
from approximately 3.0 million in 1990 to over 4.3 million by the year 2000. The
Company believes that increases in human life expectancy will result in
increased demand for services similar to those provided by the Company.

SERVICES

         The Company operates assisted living facilities in the following
locations: Rock Island, Illinois; Fort Madison, Iowa; Cumberland, Maryland; Port
Huron, Michigan; Beatrice, Nebraska; Hastings, Nebraska; Dickinson, North
Dakota; and Williston, North Dakota. Except for the facilities in North Dakota,
which are modern buildings, the Company's facilities are located in historic,
renovated hotels, most of which are on the National Register of Historic Places.
The


                                       6
<PAGE>
Company's facilities range in size from 64 units to 115 units. See Item 2 --
"Description of Property."

         Assisted Living Properties. The Company's current portfolio of
properties is aimed at the middle to more affordable price range within the
senior care market. The Company offers a range of assisted living care and
services, which are available 24 hours per day at each of its assisted living
facilities. The services offered by the Company include personal care, support
and certain supplemental services. Personal care services include assistance
with ADLs, such as ambulating, bathing, dressing, eating, grooming, personal
hygiene, monitoring or assistance with medications and confusion management.
Support services include meal preparation, assistance with social and
recreational activities, laundry services, general housekeeping, maintenance
services and transportation services. Supplemental services, which are offered
at an extra charge, include beauty and barber services, extra laundry services
and non-routine care services. The rates for assisted living units at the
Company's facilities range from approximately $1,000 to $2,400 per month,
depending, among other things, on the size of the unit and the location of the
community.

         Adult Day Care. The Company currently provides adult day care services
at its Cumberland, Maryland property. The Company charges approximately $60 per
day for its adult day care services. The Company believes that adult day care is
a natural complement to its existing assisted living facilities because many of
the Company's properties have large ballrooms or activity rooms which are
underutilized. Adult day care services, because they are offered to senior
citizens who do not reside in the Company's properties, have the potential to
generate new residents for the Company's assisted living residences by
introducing them to the Company.

MARKETING AND SALES

         The Company's marketing strategy is intended to create awareness of the
Company and its services among potential residents and their family members and
referral sources, such as physicians, clergy, local area agencies for the
elderly, home health agencies and social workers. A central marketing staff
person located at the Company's facility in Hastings, Nebraska coordinates the
Company's overall strategies for promoting the Company throughout its markets
and monitors the success of the Company's marketing efforts. Additionally, the
Company has hired an outside marketing and public relations firm to develop
marketing materials for the Company as a whole and for each of the Company's
facilities. The Company also relies on print advertising, yellow pages
advertising, direct mail, signage and special events, such as grand openings for
new facilities and community receptions.

COMPETITION

         The health care industry is highly competitive and the Company believes
that the assisted living business will become more competitive in the future.
There are currently few regulatory and other barriers to entry in the assisted
living industry. The Company faces competition for residents and for employees
from numerous local, regional and national providers of facility-based assisted
living and long-term care, including skilled nursing facilities, as well as
medical rehabilitation and home health care providers. Many of the Company's
present and potential competitors are significantly larger or have greater
financial resources than those of the


                                       7
<PAGE>
Company. Additionally, some of the Company's competitors operate on a
not-for-profit basis or as charitable organizations. If the development of new
assisted living facilities surpasses the demand for such facilities in
particular markets, such markets could become saturated. Competition could limit
the Company's ability to attract residents and patients and expand its business
and could have a material adverse effect on the Company's business, results of
operations and financial condition.

         The Company believes the primary competitive factors in the senior care
industry are: reputation for, and commitment to, high quality care; quality of
support services offered (such as home health care and food services); price of
services; physical appearance and amenities associated with the facilities; and
location. Because seniors tend to choose senior living facilities near their
homes, the Company's principal competitors are other senior living and long-term
care facilities in the same geographic areas as the Company's facilities. The
Company also competes with other health care businesses with respect to
attracting and retaining nurses, technicians, aides, and other high quality
professional and nonprofessional employees and managers.

GOVERNMENT REGULATION

         The assisted living industry is subject to extensive federal, state and
local regulation. The various layers of governmental regulation affect the
Company's business by controlling its growth, requiring licensure or
certification of its facilities, regulating the use of its facilities and
controlling reimbursement to the Company for services provided. Licensing,
certification and other applicable governmental regulations vary from
jurisdiction to jurisdiction and are revised periodically. It is not possible to
predict the content or impact of future legislation and regulations affecting
the assisted living industry.

         Assisted Living Facilities. The Company's assisted living facilities
are subject to regulation by various state and local agencies. There are
currently no federal laws or regulations specifically governing assisted living
facilities. State requirements relating to the licensing and operation of
assisted living facilities vary from state to state; however, most states
regulate many aspects of a facility's operations, including physical plant
requirements; resident rights; personnel training and education; requisite
levels of resident independence; administration of medications; safety and
evacuation plans; and the level and nature of services to be provided, including
dietary and housekeeping. In most states, assisted living facilities must also
comply with state and local building and fire codes and certain other licenses
or certifications, such as a food service license, may be required. Assisted
living facilities are subject to periodic survey by governmental agencies with
licensing authority. In certain circumstances, failure to satisfy survey
standards could result in a loss of licensure and closure of a facility.

         Because assisted living facilities historically have not been
considered as traditional health care entities and government and private
insurers have not reimbursed providers for assisted living services, these
facilities have not been subject to the degree of regulation which governs
nursing homes and other health care providers. As assisted living emerges as a
cost-effective alternative to nursing facility care, assisted living facilities
could become subject to more extensive regulation, particularly in the areas of
licensure and reimbursement. The content of such regulations, the extent of any
increased regulation and the impact of any such regulation


                                       8
<PAGE>
on the Company cannot be predicted at this time and there can be no assurance
that such regulations will not adversely affect the Company's business.

         The Company believes the structure and composition of government
regulation of health care will continue to change and, as a result, it regularly
monitors developments in the law. The Company expects to modify its agreements
and operations from time to time as the business and regulatory environment
changes. While the Company believes it will be able to structure all its
agreements and operations in accordance with applicable law, there can be no
assurance that its arrangements will not be successfully challenged.

         Americans with Disabilities Act. Under the Americans with Disabilities
Act of 1990, all places of public accommodation are required to meet certain
federal requirements related to access and use by disabled persons. A number of
additional federal, state and local laws exist which also may require
modifications to existing and planned properties to create access by disabled
persons. While the Company believes that its properties are substantially in
compliance with present requirements or are exempt therefrom, in part because of
their historic value, if required changes involve a greater expenditure than
anticipated or must be made on a more accelerated basis than anticipated,
additional costs would be incurred by the Company. Further, legislation may
impose additional burdens or restrictions with respect to access by disabled
persons, the costs of compliance with which could be substantial.

         Environmental Regulation. The Company is subject to various federal,
state and local environmental laws and regulations. Such laws and regulations
often impose liability whether or not the owner or operator knew of, or was
responsible for, the presence of hazardous or toxic substances. The costs of any
required remediation or removal of these substances could be substantial and the
liability of an owner or operator as to any property is generally not limited
under such laws and regulations and could exceed the property's value and the
aggregate assets of the owner or operator. The presence of these substances, or
failure to remediate such contamination properly, may also affect adversely the
owner's ability to sell or rent the property, or to borrow using the property as
collateral. Under these laws and regulations, an owner, operator or an entity
that arranges for the disposal of hazardous or toxic substances, such as
asbestos-containing materials, at the disposal site, may also be liable for the
costs of any required remediation or removal of the hazardous or toxic
substances at the disposal site. In connection with the ownership or operation
of its properties, the Company could be liable for these costs, as well as
certain other costs, including governmental fines and injuries to persons or
properties.

EMPLOYEES

         As of October 5, 2001, the Company had approximately 282 employees,
including 128 part-time employees. None of the Company's employees are currently
represented by a union. The Company believes that it has a good relationship
with its employees, in part because it provides them with annual cash bonuses, a
stock option program, health care coverage and a 401(k) program.

                                       9
<PAGE>
FACTORS THAT MAY AFFECT RESULTS

         The Company's business, financial condition and results of operations
are subject to many risks, including those discussed under " -- Competition" and
" -- Government Regulation" above and those set forth below.

         Limited Operating History. The Company was incorporated in 1997 and
began operations in January 1998 and consequently has a limited operating
history. Accordingly, there can be no assurance that the Company will not incur
losses. Failure to achieve profitability could have a material adverse effect on
the Company's business, results of operations and financial condition.

         Formation from Chapter 11 Proceedings. The Company was formed pursuant
to the Plan of Reorganization, which became effective on September 30, 1998. The
Company's experience with Chapter 11 reorganization may affect the Company's
ability to negotiate favorable trade terms with vendors. The failure to obtain
such favorable terms could have a material adverse effect on the Company's
business, results of operations and financial condition.

         Need for Additional Capital. The Company's growth is subject to its
ability to maintain or further increase revenues at existing facilities and the
availability of capital. The Company has begun and continues to work with
various sources of long-term financing to refinance existing loans in order to
obtain financing with a longer term and obtain additional liquidity for future
capital projects. In the opinion of management, we expect the Company will have
sufficient cash from operations for the Company's operating and capital
expenditure needs for at least the next 12 months. There can be no assurance
that the Company will be able to maintain or further increase revenues at
current facilities or that sufficient capital will be available or, if
available, that it will be available on terms that the Company considers
reasonable. Further, owing to the age of the Company's historic properties, the
Company's facilities may require greater upkeep and capital expenditures than
more modern facilities. The Company's inability or failure to maintain or
further increase such revenues or obtain such sufficient capital on favorable
terms could have a material adverse effect on its business, results of
operations and financial condition.

         Debt Obligations. As of September 30, 2001, there was an aggregate
balance of approximately $14,959,000 outstanding on mortgages secured by certain
of the Company's properties. See Item 2 -- "Description of Property." Virtually
all of the Company's long-term debt will come due in one year, subject to an
extension to as much as an additional two years upon the repayment of
substantial amounts of principal. Consequently, a significant portion of the
Company's cash flow is expected to be devoted to debt service, and there is a
risk that the Company will not be able to generate sufficient cash flow from
operations to cover required debt payments. The Company has begun and continues
to work with various sources of long-term financing to refinance the existing
loans in order to obtain financing with a longer term, reduce the impact of debt
financing on future cash flows, and obtain additional liquidity for future
capital projects. If the Company were unable to generate sufficient cash flow
from operations to cover required debt payments in the future, there can be no
assurance that sufficient financing would be available to cover the
insufficiency or, if available, that the financing would be on


                                       10
<PAGE>
terms acceptable to the Company. In the absence of financing, the Company's
ability to make scheduled principal and interest payments on its indebtedness
would be adversely affected.

         Obtaining Residents and Maintaining Rental Rates. As of September 30,
2001, the senior citizen housing facilities owned and operated by the Company
had a combined occupancy rate of approximately 82%. Occupancy may drop in these
facilities primarily due to changes in the health of residents, increased
competition from other providers of assisted living services that may give
residents more choices with respect to the provision of such services, and
changes in state regulations. Turnover among residents is affected by their
health, and higher turnover can adversely affect the Company's results of
operations. There can be no assurance that, at any time, any of the Company's
facilities will be substantially occupied at assumed rents. In addition, full
occupancy may be achievable only at rental rates below those assumed. The
Company's operating expenses could be affected adversely by a variety of
factors, including the level of services required to retain residents, which in
turn is affected by the age and health of residents. If operating expenses
increase, local rental market conditions may limit the extent to which rents may
be increased. In addition, the failure of the Company to generate sufficient
revenue could result in an inability to make interest and principal payments on
its indebtedness.

         General Real Estate Risks. The performance of the Company's senior
citizen housing facilities is influenced by factors affecting real estate
investments, including the general economic climate and local conditions, such
as an oversupply of, or a reduction in demand for, assisted living residences.
Other factors include the attractiveness of properties to residents, zoning,
rent control, environmental quality regulations or other regulatory
restrictions, competition from other forms of housing and the ability of the
Company to provide adequate maintenance and insurance and to control operating
costs, including maintenance, insurance premiums and real estate taxes. Real
estate investments are also affected by such factors as applicable laws,
including tax laws, interest rates and the availability of financing. Real
estate investments are relatively illiquid and, therefore, limit the ability of
the Company to vary its portfolio promptly in response to changes in economic or
other conditions. Any failure by the Company to operate its senior citizen
housing facilities effectively may have a material adverse effect on the
Company's business, financial condition and results from operations.

         Liability and Insurance. Providing assisted living services involves an
inherent risk of liability. Participants in the senior living and health care
industry are subject to lawsuits alleging negligence or related legal theories,
many of which may involve large claims and significant legal costs. The Company
currently maintains liability insurance intended to cover claims in amounts and
with such coverages and deductibles that it believes are adequate and in keeping
with industry practice. However, claims in excess of the Company's insurance
coverage or claims not covered by the Company's insurance (e.g., claims for
punitive damages) may arise. A successful claim against the Company not covered
by or in excess of the Company's insurance coverage could have a material
adverse effect on the Company's business, results of operations and financial
condition. Claims against the Company, regardless of their merit or eventual
outcome, may also have a material adverse effect upon the Company's reputation
and its ability to attract residents or expand its business. The Company's
insurance policies generally must be renewed annually, and there can be no
assurance that the Company will be able to obtain liability insurance coverage
in the future on acceptable terms, if at all.

                                       11
<PAGE>
         Dependence on Key Personnel. The Company's operations have been
significantly dependent on the contributions of management, and the loss of the
services of the Company's senior officers -- Messrs. Pittore, Tolley and Westin
-- could have a material adverse effect on the Company's business, results of
operations and financial condition. The Company has entered into employment
agreements with each of its senior officers. See Item 10 -- "Executive
Compensation -- Employment Agreements." The Company's success also depends to a
significant extent upon a number of other key employees of the Company,
including the Company's Chief Operating Officer and National Marketing Director.
The loss of the services of one or more of these key employees also could have a
material adverse effect on the Company. The Company does not carry key person
life insurance. In addition, the Company believes that its future success will
depend in part upon its ability to attract and retain additional highly skilled
professional, managerial, sales and marketing personnel. Competition for such
personnel is intense. There can be no assurance that the Company will be
successful in attracting and retaining the personnel that it requires for its
business and planned growth.

         Labor Costs. The Company competes with various health care providers
and other employers for limited qualified and skilled personnel in the markets
that it serves. The Company expects that its labor costs will increase over
time. Currently, none of the Company's employees is represented by a labor
union. If employees of the Company were to unionize, the Company could incur
labor costs higher than those of competitors with nonunion employees. The
Company's business, results of operations and financial condition could be
adversely affected if the Company is unable to control its labor costs.

         Conflicts of Interest. Certain of the Company's officers and directors
may, by virtue of their investment in or involvement with entities providing
services or office space to the Company have an actual or potential conflict of
interest with the interests of the Company. See Item 12 -- "Certain
Relationships and Related Transactions." From time to time, vendors may require
personal guarantees from the executive officers of the Company and such personal
guarantees may create a conflict of interest for such executive officer.

         No Public Market for the Common Stock. If shares of the Company's
Common Stock are traded after their original issuance pursuant to the Plan of
Reorganization, they are expected to trade at varying prices, depending upon the
market for similar securities and other factors, including general economic
conditions and the financial condition and performance of, and prospects for,
the Company. The Plan of Reorganization provides that, as soon as practicable
after the effective date of the Plan of Reorganization, the Company shall take
the necessary steps to have the Company's Common Stock publicly traded. The
Company's management is currently investigating "over-the-counter" quotation of
the Company's Common Stock on the OTC Bulletin Board(R). However, there can be
no assurance that the Company will be successful in its efforts to establish a
public trading market for the Common Stock or that any market making activity
with respect to the Common Stock will continue in the future, if and once
initiated. See " -- Risks of Low-Priced Stock; Possible Effect of `Penny Stock'
Rules on Liquidity for the Company's Securities."

         Risks of Low-Priced Stock; Possible Effect of "Penny Stock" Rules on
Liquidity for the Company's Securities. As discussed above, the Company's
management is currently investigating "over-the-counter" quotation of the
Company's Common Stock on the OTC Bulletin


                                       12
<PAGE>
Board(R). See " -- No Public Market for the Common Stock." As such, the
Company's securities may become subject to Rule 15g-9 under the Exchange Act,
which imposes additional sales practice requirements on broker-dealers that sell
such securities to persons other than established customers and "accredited
investors" (generally, individuals with a net worth in excess of $1,000,000 or
annual incomes exceeding $200,000 or $300,000 together with their spouses). Rule
15g-9 defines "penny stock" to be any equity security that has a market price
(as therein defined) of less than $5.00 per share or an exercise price of less
than $5.00 per share, subject to certain exceptions, none of which are currently
met or are anticipated to be met by the Company in the foreseeable future. For
transactions covered by Rule 15g-9, a broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale. For any transaction involving
a penny stock, unless exempt, the rules require delivery, prior to any
transaction in a penny stock, of a disclosure schedule prepared by the
Securities and Exchange Commission ("SEC") relating to the penny stock market.
Disclosure is also required to be made about sales commissions payable to both
the broker-dealer and the registered representative and current quotations for
the securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account of the
broker-dealer's client and information on the limited market in penny stock.
Consequently, such Rule may affect the ability of broker-dealers to sell the
Company's securities and may affect the ability of purchasers to sell any of the
Company's securities in the secondary market.

         There can be no assurance that the Company's securities will qualify
for an exemption from the penny stock restrictions. In any event, even if the
Company's securities become exempt from such restrictions, the Company would
remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the
authority to restrict any person from participating in a distribution of penny
stock, if the SEC finds that such a restriction would be in the public interest.

         If the Company's securities are subject to the rules on penny stocks,
the market liquidity for the Company's securities could be materially and
adversely affected.

         Limitation on Payment of Dividends on Capital Stock. Since the
Company's formation in April 1997, the Company has not paid any dividends on its
common stock and does not anticipate doing so in the foreseeable future.
Moreover, the Plan of Reorganization provides that the Company may not declare
any dividends until certain indebtedness specified in the Plan of Reorganization
is paid in full or otherwise satisfied. There can be no assurance that the
Company will pay out any return on its common stock.

         Control by Officers, Directors and Affiliated Entities. The Company's
executive officers, directors and certain entities affiliated with such
directors beneficially own in the aggregate approximately 35.1% of the issued
and outstanding shares of the Company's common stock. See Item 11 -- "Security
Ownership of Certain Beneficial Owners and Management." Such stockholders may
have sufficient voting power to control the outcome of matters (including the
election of directors and any merger, consolidation or sale of all or
substantially all of the Company's assets) submitted to the stockholders for
approval and may be deemed to have effective control over the affairs and
management of the Company. This controlling interest in the Company may also
have the effect of making certain transactions more difficult or impossible,
absent the support of such stockholders. Such transactions could include a proxy
contest,


                                       13
<PAGE>
mergers involving the Company, tender offers and open market purchase programs
involving the Company's common stock that could give stockholders of the Company
the opportunity to realize a premium over the then prevailing market price for
their shares of the Company's common stock.

         Anti-Takeover Provisions. Certain provisions of the Company's Bylaws
and Nevada law could have the effect of making it more difficult for a third
party to acquire, or of discouraging a third party from attempting to acquire,
control of the Company. Such provisions could limit the price that certain
investors might be willing to pay in the future for shares of the Company's
Common Stock.

ITEM 2. DESCRIPTION OF PROPERTY

         The following table sets forth, as of September 30, 2001, certain
information as to the facilities owned by the Company:
<TABLE>
<CAPTION>
                                                                                                           Year
         Facility Location (Facility Name)                                 No. of Beds    Year Built    Reopened(1)
-----------------------------------------------------                      -----------    ----------    ----------
<S>                                                                        <C>            <C>           <C>
Rock Island, Illinois (The Fort Armstrong)                                      92           1926           1990
Fort Madison, Iowa (The Kensington)                                             75           1954           1988
Cumberland, Maryland (The Kensington Algonquin)                                 86           1926           1989
Port Huron, Michigan (The Harrington Inn)                                       72           1896           1990
Beatrice, Nebraska (The Kensington Paddock)                                     64           1934           1989
Hastings, Nebraska (The Kensington)                                             80           1914           1988
Dickinson, North Dakota (The Evergreen Retirement Inn)                          78           1980           1990
Williston, North Dakota (The Kensington)                                       115           1983           1988
</TABLE>

----------
(1)      "Year Reopened" refers to the year in which the facility was reopened
         as an assisted living facility, after renovation of the historic
         property. The Company's facilities at Dickinson, North Dakota and
         Williston, North Dakota are not historic properties.

         Each of the facilities listed in the table above is subject to a
mortgage. See Item 6 -- "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources." As of
September 30, 2001 there was an aggregate balance of $14,959,000 outstanding
under the mortgages, with the amount owing on a property ranging from
approximately $550,000 to $4,171,000.

         The Company has entered into an agreement with entities controlled by
Richard J. Westin and Jesse A. Pittore, directors and officers of the Company,
to jointly develop, build and operate an Alzheimer's facility in Cumberland,
Maryland. The agreement provides, in part, for the Company to contribute land
located adjacent to its Cumberland, Maryland facility upon which the Alzheimer's
facility has been built. The Westin and Pittore entities have funded or
guaranteed financing of all costs to build, furnish and operate the facility.
For its contribution of land, the Company has received a 25% ownership interest
and 25% of all net income and proceeds from the operation and sale of the
facility.

                                       14
<PAGE>
         In December, 2000, the Company disposed of its property located in
Manitowoc, WI in return for cancellation of liability for prior years' unpaid
property taxes. In May, 2001, the Company closed its facility located in
Chanute, KS which had been operating at a deficit for several years. In
November, 2001 the Company contracted to sell the facility for $300,000 and
expects to realize approximately $280,000 net of selling expenses upon close of
the sale.

         The Company currently maintains insurance on its properties in amounts
and with such coverages and deductibles that it believes are adequate and in
keeping with industry practice. The Company also believes that its properties
are suitable for their use as assisted living facilities.

         The Company leases its headquarters in Berkeley, California from The
Waterford Company, which is owned by members of Mr. Westin's family, for $24,000
per year and on terms and conditions that the Company's believes are at or more
favorable than prevailing market rates. See Item 12 -- "Certain Relationships
and Related Transactions."

ITEM 3. LEGAL PROCEEDINGS

         The Company was formed pursuant to the Plan of Reorganization, which
was proposed by the Partnerships in January 1997 and confirmed by the bankruptcy
court on September 30, 1998. See Item 1 -- "Business -- Formation of the Company
and Plan of Reorganization."

         From time to time, the Company is party to litigation arising out in
the ordinary course of business. The Company believes that no pending legal
proceeding will have a material adverse effect on the Company's business,
financial condition or results of operations.

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

         No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Report.

PART II

ITEM 5. MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

         There is currently no public trading market for the Company's Common
Stock. As of December 21, 2001, there were 4,633 stockholders of record.

         The outstanding Common Stock of the Company issued pursuant to the Plan
of Reorganization is freely tradable by reason of the exemption from
registration provided by section 1145 of the Bankruptcy Code.

         The Plan of Reorganization prohibits the Company from declaring any
dividends on its Common Stock until certain of the notes issued pursuant to the
Plan of Reorganization are paid in full or otherwise satisfied. Since the
Company's formation in April 1997, the Company has not paid any dividends on its
common stock and does not anticipate doing so in the foreseeable future.

                                       15
<PAGE>
         In December 1998, the stockholders of the Company approved the adoption
of the Company's 1997 Employee Stock Incentive Plan, a stock option plan for
certain employees and directors. As of September 30, 2001, options to purchase
up to a total of 237,164 shares of common stock were granted at exercise prices
ranging from $1.00 to $1.10 per share to the officers and directors of the
Company. The Company relied on the exemption from the registration requirements
of the Securities Act provided by Rule 701 under the Securities Act.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         When used in this discussion, the words "expects," "anticipates,"
"estimates," and similar expressions are intended to identify forward-looking
statements. Such statements, which include statements as to the adequacy of the
Company's capital resources, the ability to obtain new sources of capital, and
the ability to service its debt obligations as they become due, are subject to
risks and uncertainties that could cause actual results to differ materially
from those projected. These risks and uncertainties include, but are not limited
to, those risks discussed below, as well as the matters discussed in "Factors
That May Affect Results." See Item 1 -- "Description of Business -- Factors That
May Affect Results." These forward-looking statements speak only as of the date
hereof. The Company expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements contained
herein to reflect any change in the Company's expectations with regard thereto
or any change in events, conditions or circumstances on which any such statement
is based.

RESULTS OF OPERATIONS

OVERVIEW

         Operations for the twelve months ended September 30, 2001 reflect
partial year operations for two of the Company's properties and a full year for
eight of the Company's properties. Operations for the twelve months ended
September 30, 2000 reflect a full twelve-month period of operations for all of
the Company's ten properties.

TWELVE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THE TWELVE MONTHS ENDED
SEPTEMBER 30, 2000

         Property gross revenue increased from $10,223,000 for the twelve months
ended September 30, 2000 to $10,960,000 for the twelve months ended September
30, 2001, reflecting generally higher rental rates. In general, higher rates
reflect an increase in the kinds and quantities of services being provided to
residents.

         Payments on the Company's secured indebtedness were allowed to be
deferred during a moratorium period from June, 2000 through January, 2001. To
the extent amounts have been expended to make improvements to the Company's
Hastings, NE property these payments have been forgiven. During the period ended
September 30, 2001 $374,000 was paid or incurred for such improvements.

         Other income increased from $63,000 in 2000 to $66,000 in 2001.

                                       16
<PAGE>
         Property operating expenses increased from $8,661,000 in the 2000
period to $8,960,000 in the 2001 period, reflecting higher costs of providing
higher levels of services primarily driven by higher personnel costs.

         Administrative and overhead expenses decreased from $790,000 in the
2000 period to $734,000 in the 2001 period. The decrease is reflected in lower
amounts for each classification of expense in the 2001 period except for other
administrative costs which increased during the period. Administrative and
overhead expenses for the 2000 period consisted of $525,000 in salaries and
other personnel-related costs including employee benefits, payroll taxes and
travel expenses; legal and accounting expenses of $113,000; office and occupancy
costs of $27,000; and other administrative costs of $125,000. Within other
administrative costs are $44,000 of expenses paid and capitalized during the
1999 period for reports and appraisals required to refinance debt which were
expensed in 2000 when financing was not obtained. Administrative and overhead
expenses for the 2001 period consisted of $475,000 in salaries and other
personnel-related costs including employee benefits, payroll taxes and travel
expenses; legal and accounting expenses of $65,000; office and occupancy costs
of $28,000; and other administrative costs of $168,000. Within other
administrative costs are $58,000 of expenses paid and capitalized during the
2000 period for reports and appraisals required to refinance debt which were
expensed in 2001 when financing was not obtained.

         Stock option compensation decreased from $266,000 during the 2000
period to $210,000 during the 200 period, reflecting the smaller number of
options vesting in the 2001 period.

         Income tax expense increased from $13,000 during the 2000 period to
$445,000 for the 2001 period, due solely to the adjustment of deferred taxes.

         Interest expense increased from $953,000 in the 2000 period to
$1,002,000 in the 2001 period, primarily due to note terms which require a
higher interest rate on the mortgage note secured by the Company's Rock Island
facility.

LIQUIDITY AND CAPITAL RESOURCES

         Cash and cash equivalents decreased from $355,000 at September 30, 2000
to $188,000 at September 30, 2001. Net cash provided by operations was $379,000
in the 2001 period compared to net cash used in operations of $115,000 in the
2000 period. This change was primarily due to greater deferrals of interest
payments in the 2001 period.

         Net cash used by investing activities in the 2001 period was $673,000
consisting primarily of additions to property and equipment of $675,000 at the
Company's facilities. In addition $2,000 previously advanced to the Company's
joint venture in Cumberland, MD to support start-up costs was repaid. Net cash
used by investing activities was $205,000 in 2000, reflecting additions to
property and equipment at the Company's facilities and advances to support
start-up costs in Maryland.

         Net cash provided by financing activities in the 2001 period was
$127,000 consisting of new notes payable proceeds of $550,000 offset by
principal payments on Superfirst notes payable of $366,000 , principal payments
on tax notes of $50,000 and principal payments on lease obligations of $7,000.
Net cash used in financing activities in the 2000 period was


                                       17
<PAGE>
$105,000 consisting of regular principal payments of $47,000 and $58,000 in new
financing costs paid to obtain new long-term financing to replace a portion of
the Company's maturing debt.

  Notes payable (in thousands) consist of the following at September 30, 2001:

           Notes secured by real estate:
<TABLE>
           <S>                                                     <C>
           Regular mortgage notes.............................     $       9,277
           Rock Island mortgage note..........................             4,171
           Superfirst note....................................               519
           Reimbursement notes................................               392
           Related party note............................                    550
                                                                   -------------
           Other notes........................................                50
                                                                   -------------
              Total secured notes.............................     $      14,959
           Tax notes..........................................               145
                                                                   -------------
              Total notes payable.............................     $      15,104
                                                                   =============
</TABLE>

         There are four regular mortgage notes, dated September 30, 1998, that
bear interest at 8% per annum. Interest on each of the notes is payable monthly
at a rate of 6% per annum. Accrued and unpaid interest resulting from this
deferral provision increased by $278,309 during the year ended September 30,
2000 to $674,892. The notes were originally due on September 30, 2001 but were
extended to September 30, 2002. They may be extended for additional periods of
one year upon payment of $1,250,000 before September 30, 2002 and $1,500,000
before September 30, 2003. On a quarterly basis, any portion of the 8% interest
which is unpaid and 75% of any computed net cash flow from the properties
securing the notes is payable. To the extent that this calculation results in a
payment of principal, that sum is to be retained by the lender as a reserve for
capital improvements. No amounts were computed to be payable under this
provision during the years ended September 30, 2001 and 2000. These notes are
secured by first mortgage liens on properties in Dickinson, ND, Williston, ND,
Fort Madison, IA and Hastings, NE.

         The Rock Island mortgage note, dated September 30, 1998, bears interest
as follows: from October 1, 1998 through September 30, 1999, the lesser of 3%
per annum on the unpaid principal balance or computed cash flow from the Rock
Island property; from October 1, 1999 through September 30, 2000, the greater of
3% per annum on the unpaid principal balance or computed cash flow from the Rock
Island property; from October 1, 2000 until maturity, the greater of 4% per
annum on the unpaid principal balance or computed cash flow from the Rock Island
property. For the year ended September 30, 2001 interest payable $110,160 was
computed and $62,565 was paid. For the year ended September 30, 2000, interest
payable of $83,420 was computed through May, 2000 and $88,719 was paid during
the period. The note is secured by a first mortgage lien on the property located
in Rock Island, IL and was due on September 30, 2001 but was extended to
September 30, 2002.

         By agreement with the holder of the regular mortgage notes and the Rock
Island mortgage note, minimum interest payments required to be paid from June,
2000 through January, 2001 have been deferred to provide funds to perform
substantial modifications to the property located in Hastings, NE. These
modifications are required by local licensing authorities in order to continue
the operation of the property as an assisted living facility. Accrued and


                                       18
<PAGE>
unpaid interest pursuant to this arrangement amounted to $227,500 as of
September 30, 2000 and to $467,870 by January, 2001. During the year ended
September 30, 2001 $374,048 was incurred for the modifications required on the
Hastings, NE property leaving a remaining balance of $93,821 deferred for
further required modifications.

         The Superfirst note and two reimbursement notes, dated September 30,
1998, bear interest at 5% per annum. A prearranged principal payment of $508,000
was applied to the outstanding balance on November 10, 1998. No other periodic
payments of interest or principal are required. Accrued and unpaid interest
resulting from this deferral provision amounted to $63,873 in each of the years
ended September 30, 2001 and 2000. On September 30, 2001 all of the accrued and
unpaid interest on these notes of $196,905 was paid and their principal balance
was reduced by $366,333. All of the accrued interest and unpaid principal is due
on September 30, 2002. These notes are secured by first mortgage liens on
properties located in Beatrice, NE and Port Huron, MI

         The related party note, dated September 30, 2001, bears interest at 10%
per annum. Monthly payments of interest only are required on the outstanding
balance. The note was written in the amount of $1,000,000 and funded in the
amount of $550,000 on September 30, 2001. The note is secured by deed of trust
on the property located in Cumberland, MD and is due September 30, 2003. The
note is payable to entities controlled by Richard J. Westin and Jesse A.
Pittore, officers and directors of the Company. See item 12. -- "Certain
Relationships and Related Transactions".

         The other secured notes consist of two notes totaling approximately
$50,000 bearing interest at 8% per annum. No periodic interest or principal
payments are required on these two notes. Accrued and unpaid interest resulting
from this deferral provision increased by $3,976 each year during the years
ended September 30, 2001 and 2000. As of September 30, 2001, the total amount of
accrued and unpaid interest on these notes is $26,176. All of the accrued
interest and unpaid principal is due on September 30, 2002. These two notes are
secured by a second mortgage lien on the property located in Williston, ND.

         The tax notes bear interest at 8% per annum. Payments of interest and
principal are due semi-annually each January and July in the amount of $5,886
through January, 2004 and each February and August in the amount of $26,638
through February,2004.

         Future maturities of notes payable (in thousands) at September 30, 2000
are as follows:

         Years ending September 30:
<TABLE>
                <S>                                          <C>
                2002.................................         14,464
                2003.................................            610
                2004.................................             30
                                                             -------
                                                             $15,104
                                                             =======
</TABLE>

         Virtually all of the Company's long-term debt will come due next year,
subject to an extension to as much as an additional two years upon the repayment
of substantial amounts of principal. In addition, the loans provide for
substantial discounts for early repayment. The Company has begun and continues
to work with various sources of long-term financing to


                                       19
<PAGE>
refinance the existing loans in order to obtain financing with a longer term,
reduce the impact of debt financing on future cash flows, and obtain additional
liquidity for future capital projects. Management expects that the Company will
have sufficient cash from operations for the Company's operating and capital
expenditure needs for at least the next 12 months.

IMPACT OF INFLATION

         Management believes that the Company's operations have not been
materially adversely affected by inflation. The Company expects that it will be
able to offset the effects of inflation on salaries and other operating expenses
by increases in rental rates, subject to applicable restrictions in North
Dakota, where the Company receives subsidies.


                                       20
<PAGE>
ITEM 7. FINANCIAL STATEMENTS

                               AGEMARK CORPORATION
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                                                                  Page
<S>                                                                                            <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                                                  22


FINANCIAL STATEMENTS

Balance sheet as of September 30, 2001                                                              23

Statements of operations for the years ended September 30, 2001 and 2000                            24

Statements of stockholders' equity for the years ended September 30, 2001 and 2000                  25

Statements of cash flows for the years ended September 30, 2001 and 2000                            26

Notes to financial statements                                                                  27 - 38


SCHEDULE XI

Real estate and accumulated depreciation                                                            39
</TABLE>



                                       21
<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders and
Board of Directors of
Agemark Corporation

We have audited the accompanying balance sheet of AGEMARK CORPORATION (a Nevada
corporation) as of September 30, 2001, and the related statements of operations,
stockholders' equity, and cash flows for the years ended September 30, 2001 and
2000. We have also audited the financial statement Schedule XI. These financial
statements are the responsibility of the Company'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 perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AGEMARK CORPORATION as of
September 30, 2001, and the results of its operations and its cash flows for the
years ended September 30, 2001 and 2000 in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, the
related financial statement Schedule XI, when considered in relation to the
basic financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.


                                              TIMPSON GARCIA, LLP

Oakland, California
December 21, 2001


                                       22
<PAGE>
                               AGEMARK CORPORATION

                                  BALANCE SHEET

                               SEPTEMBER 30, 2001

                        (IN THOUSANDS EXCEPT SHARE DATA)

                                   A S S E T S
<TABLE>
<S>                                                             <C>
Cash and cash equivalents                                       $             188
Property and equipment, net                                                19,068
Property held for sale                                                        280
Investment in joint venture                                                   175
Other assets                                                                  477
                                                                -----------------
              Total assets                                      $          20,188
                                                                =================


                      LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

     Accounts payable and accrued liabilities                   $           2,003
     Notes payable                                                         15,104
     Capitalized lease obligations                                             39
                                                                -----------------
              Total liabilities                                 $          17,146
                                                                -----------------

STOCKHOLDERS' EQUITY

     Common stock, stated value $.001, 20,000,000 shares
      authorized, 1,000,000 shares issued and outstanding       $               1
     Additional paid in capital                                             6,562
     Accumulated (deficit)                                                (3,521)
                                                                -----------------
              Total stockholders' equity                        $           3,042
                                                                -----------------

              Total liabilities and stockholders' equity        $          20,188
                                                                =================

              See accompanying notes to financial statements.
</TABLE>


                                       23
<PAGE>
                               AGEMARK CORPORATION

                            STATEMENTS OF OPERATIONS

                     YEARS ENDED SEPTEMBER 30, 2001 AND 2000

                        (IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
                                                                                           2001              2000
                                                                                           ----              ----
<S>                                                                                  <C>               <C>
Revenue

     Property gross revenue                                                          $       10,520    $       10,223
     Interest forgiven                                                                          374
     Other income                                                                                66                63
                                                                                     --------------    --------------
              Total revenue                                                          $       10,960    $       10,286
                                                                                     --------------    --------------
Expenses

     Property operating expenses                                                     $        8,960    $        8,661
     Administrative and overhead expenses                                                       734               790
     Stock option compensation                                                                  210               266
     Interest expense                                                                         1,002               953
     Depreciation                                                                               615               629
                                                                                     --------------    --------------
              Total expenses                                                         $       11,521    $       11,299
                                                                                     --------------    --------------
                                                                                     $         (561)   $       (1,013)

Loss on disposition of property                                                                (626)
Loss from write down of long lived assets                                                      (642)
Equity in net income (loss) of joint venture                                                     13               (18)
                                                                                     --------------    --------------

              (Loss) before income taxes                                             $       (1,816)    $      (1,031)

Income tax expense                                                                              445                13
                                                                                     --------------    --------------
              Net (loss)                                                             $       (2,261)    $      (1,044)
                                                                                     ==============    ==============
              Basic and fully diluted (loss) per common share                        $        (2.26)    $       (1.04)
                                                                                     ==============    ==============
</TABLE>


              See accompanying notes to financial statements.


                                       24
<PAGE>
                               AGEMARK CORPORATION

                       STATEMENTS OF STOCKHOLDERS' EQUITY

                     YEARS ENDED SEPTEMBER 30, 2001 AND 2000

                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                        Additional          Retained
                                                        Common            Paid-In           Earnings
                                                        Stock             Capital           (Deficit)           Total
                                                        -----             -------           ---------           -----
<S>                                                <C>               <C>                <C>                <C>
Balance, September 30, 1999                        $           1     $        6,086     $        (216)     $       5,871


Stock option compensation                                                       266                                  266


Net (loss)                                                                                     (1,044)            (1,044)
                                                   -------------     --------------     -------------      -------------


Balance, September 30, 2000                        $           1     $        6,352     $      (1,260)     $       5,093


Stock option compensation                                                       210                                  210


Net (loss)                                                                                     (2,261)           (2,261)

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

Balance, September 30, 2001                        $           1     $        6,562     $      (3,521)     $       3,042
                                                   =============     ==============     =============      =============
</TABLE>

See accompanying notes to financial statements.


                                       25
<PAGE>
                               AGEMARK CORPORATION

                            STATEMENTS OF CASH FLOWS

                     YEARS ENDED SEPTEMBER 30, 2001 AND 2000

                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                               2001               2000
                                                                                               ----               ----
<S>                                                                                     <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES

     Net (loss)                                                                         $        (2,261)     $      (1,044)
     Adjustments to reconcile net (loss) to net cash
       provided by (used in) operating activities:
        Depreciation                                                                                615                629
        Deferred income taxes                                                                       445                 --
        Prepetition liabilities settled or compromised                                              (17)               (43)
        Moratorium interest forgiven                                                               (374)                --
        Loss on disposition of property                                                             626                 --
        Loss from write down of long-lived assets                                                   642                 --
        Stock option compensation                                                                   210                266
        Loan costs expensed                                                                          58                 --
        Undistributed (income) loss from joint venture                                              (13)                18
        Change in assets and liabilities:
           (Increase) in other assets                                                               (78)               (29)
           Increase in accounts payable and accrued liabilities                                     526                 88
                                                                                        ---------------      -------------
              Net cash provided by (used in) operating activities                       $           379      $        (115)
                                                                                        ---------------      -------------

CASH FLOWS FROM INVESTING ACTIVITIES

     Additions to property and equipment                                                $          (675)     $        (153)
     Distributions from (investment in) joint venture                                                 2                (52)
                                                                                        ---------------      -------------
              Net cash (used in) investing activities                                   $          (673)     $        (205)
                                                                                        ---------------      -------------

CASH FLOWS FROM FINANCING ACTIVITIES

     Proceeds from notes payable                                                        $           550      $          --
     Principal payments on notes payable                                                           (416)               (47)
     Principal payments on capital lease obligations                                                 (7)                --
     New loan costs paid                                                                             --                (58)
                                                                                        ---------------      -------------
              Net cash provided by (used in) financing activities                       $           127      $        (105)
                                                                                        ---------------      -------------

              Net (decrease) in cash and cash equivalents                               $          (167)     $        (425)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                                        355                780
                                                                                        ---------------      -------------

              Cash and cash equivalents, end of year                                    $           188      $         355
                                                                                        ===============      =============

SUPPLEMENTAL DISCLOSURES Cash payments for:

        Interest                                                                        $           552      $         478
        Taxes                                                                           $            --      $          13
     Noncash investing and financing activities:

        Property and equipment acquired by capital lease obligation                     $            46
        Land contributed to joint venture                                                                    $         130
</TABLE>

See accompanying notes to financial statements.


                                       26
<PAGE>
                               AGEMARK CORPORATION

                          NOTES TO FINANCIAL STATEMENTS



NOTE 1.      ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

             Organization:

                Agemark Corporation (the "Company") was organized in April, 1997
                pursuant to an order of the U.S. Bankruptcy Court dated April
                27, 1997 (the "Order") to receive the assets of and continue the
                businesses of four reorganized, publicly registered limited
                partnerships and two privately held limited partnerships (the
                "Partnerships"). The Order confirmed the Second Amended Joint
                Plan of Reorganization (the "Plan") of the Partnerships filed in
                January, 1997 and amended in April, 1997. The first of the
                property transfers to the Company pursuant to the Plan was
                accomplished in January, 1998 and the final transfer took place
                in July, 1998. A total of 1,000,000 shares of stock were issued
                to the Partnerships for these properties as of September 30,
                1998 and immediately distributed to their partners.

                The property locations and their transfer dates were as follows:

<TABLE>
<S>                                                               <C>
                    Williston, ND                                 January, 1998
                    Beatrice, NE                                  April, 1998
                    Chanute, KS                                   April, 1998
                    Cumberland, MD                                April, 1998
                    Manitowoc, WI                                 April, 1998
                    Port Huron, MI                                April, 1998
                    Fort Madison, IA                              July, 1998
                    Hastings, NE                                  July, 1998
                    Dickinson, ND                                 July, 1998
                    Rock Island, IL                               July, 1998
</TABLE>

                All of the above properties transferred and retained by the
                Company are renovated hotels that have been designated as
                "Certified Historic Structures," except for the two facilities
                in North Dakota, which are modern buildings. All of the
                locations are operated as senior residential and assisted living
                facilities, except for the Manitowoc, WI property. These
                facilities provide an apartment style residence, three meals per
                day, housekeeping, transportation, activities and 24-hour
                non-medical assistance to elderly residents for a monthly fee.
                Revenues are received directly from residents, their family, or
                another responsible party. Services are generally not covered by
                government or private insurance programs, except in North
                Dakota, where the State government provides limited subsidies.
                Resident fee revenue is recognized when services are rendered.


                                   (Continued)
                                       27
<PAGE>
                          NOTES TO FINANCIAL STATEMENTS


NOTE 1.      ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

             Organization: (Continued)

                The property located in Manitowoc, WI is operated as an
                apartment complex. These units are generally rented on a
                month-to-month basis.

             Use of Estimates:

                Management uses estimates and assumptions in preparing financial
                statements. Those estimates and assumptions affect the reported
                amounts of assets and liabilities, and the reported revenues and
                expenses. Actual results could differ from those estimates.

             Property and Equipment:

                Property and equipment transferred to the Company pursuant to
                the Plan is carried at amounts stated in the Plan. Additions to
                property and equipment are stated at cost. Depreciation of
                buildings is computed using the straight-line method over
                estimated useful lives of forty years. Personal property is
                depreciated using the straight-line method over useful lives of
                fifteen years.

                In accordance with SFAS No. 121, Accounting for the Impairment
                of Long-Lived Assets and for Long-Lived Assets to be Disposed
                Of, these long-lived assets to be held and used by the Company
                are reviewed to determine whether any events or changes in
                circumstances indicate that the carrying amount of the asset may
                not be recoverable. For long-lived assets to be held and used,
                the Company bases its evaluation on such impairment indicators
                as the nature of the assets, the future economic benefit of the
                assets, any historical or future profitability measurements, as
                well as other external market conditions or factors that may be
                present. If such impairment indicators are present or other
                factors exist that indicate that the carrying amount of the
                asset may not be recoverable, the Company determines whether an
                impairment has occurred through the use of an undiscounted cash
                flows analysis of assets at the lowest level for which
                identifiable cash flow exists. If an impairment has occurred,
                the Company recognizes a loss for the difference between the
                carrying amount and the estimated value of the asset.

             Investment in Joint Venture:

                The Company has adopted the equity method of accounting for 20%
                or more owned investee companies. Under this method, the
                Company's equity in the earnings or losses of these companies is
                reflected in the Company's earnings.


                                   (Continued)
                                       28
<PAGE>
                         NOTES TO FINANCIAL STATEMENTS


NOTE 1.      ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

             Income Taxes:

                Income taxes are provided for the tax effects of transactions
                reported in the financial statements and consist of taxes
                currently due plus deferred taxes. Deferred taxes are recognized
                for differences between the basis of assets and liabilities for
                financial statement and income tax purposes. The differences
                relate primarily to the accrual of compensated absences that are
                not deductible for income tax purposes, stock options and
                differences between the carrying amounts of the property and
                equipment transferred to the Company pursuant to the Plan. The
                deferred tax assets and liabilities represent the future tax
                return consequences of those differences, which will either be
                deductible or taxable when the assets and liabilities are
                recovered or settled. Deferred taxes are also recognized for
                operating losses that are available to offset future taxable
                income.



             Stock-Based Compensation:

                The Company has elected to account for its stock option plan
                under Accounting Principles Board Opinion No. 25, Accounting for
                Stock Issued to Employees. Accordingly, no compensation expense
                has been recognized for the stock option grants.



             Cash and Cash Equivalents:

                For purposes of the statement of cash flows, the Company
                considers all money market funds purchased with a maturity of
                three months or less to be cash equivalents.



NOTE 2.      CASH AND CASH EQUIVALENTS

                At September 30, 2001, cash and cash equivalents included
                approximately $5,000 invested in Vanguard Federal Money Market
                Fund. Vanguard Federal Money Market Fund invests in United
                States Treasury obligations, securities issued or guaranteed by
                agencies of the U.S. Government, and repurchase agreements
                collateralized by these obligations and securities.

                                   (Continued)
                                       29
<PAGE>
                         NOTES TO FINANCIAL STATEMENTS


NOTE 3.      PROPERTY AND EQUIPMENT

             Property and equipment (in thousands) consists of the following at
September 30, 2001:
<TABLE>
<CAPTION>
                                                            Plan
                                                           Values             Cost             Total
                                                           ------             ----             -----
<S>                                                      <C>               <C>              <C>
                   Land                                  $     612         $    --          $     612
                   Buildings                                16,986           1,128             18,114
                   Personal property                         2,099             241              2,340
                                                        ----------         -------          ---------
                                                         $  19,697         $ 1,369          $  21,066
                                                          ========          ======
                   Less accumulated depreciation                                                1,998
                                                                                             --------
                                                                                             $ 19,068
</TABLE>

            Plan values represent the assets transferred from the four publicly
            registered limited partnerships and two privately held limited
            partnerships pursuant to the Order of the U.S. Bankruptcy Court. The
            Partnerships were as follows:

                   Publicly registered limited partnerships: Historic Housing
                      for Seniors Limited Partnership (HHS I) Historic Housing
                      for Seniors II Limited Partnership (HHS II) Historic
                      Housing for Seniors III Limited Partnership (HHS III)
                      Housing for Seniors Participating Mortgage Fund Limited
                      Partnership (PIF I)

                   Privately held limited partnerships:
                      Dickinson Associates Limited Partnership
                      Williston Associates Limited Partnership

             Under the Plan, those facilities which were determined to have the
             strongest long-term potential for generating cash flow to support
             ongoing debt or which were needed to secure certain obligations
             from previous loans were transferred to the Company. The following
             is a summary (in thousands) of the properties the Company currently
             holds, net of transfers, and the adjustments made to historical
             values to arrive at Plan values pursuant to the Order of the U.S.
             Bankruptcy Court:

<TABLE>
<CAPTION>
                     Trans-                    Accum.      Net Book      Write
      Property       ferred      Historical    Depr.         Value         Up           Plan
      Location       From          Value      12/31/97     12/31/97      (Down)        Values
      --------       ----          -----      --------     --------       ----         ------
<S>                  <C>         <C>          <C>          <C>          <C>           <C>
Beatrice, NE         HHS I         $2,742     $    888     $  1,854     $   (618)     $  1,236
Cumberland, MD       HHS I          2,058          635        1,423        2,315         3,738
Hastings, NE         HHS I          3,211        1,120        2,091          198         2,289
Rock Island, IL      HHS II         4,345        1,212        3,133         (735)        2,398
Fort Madison, IA     HHS III        3,460          781        2,679         (464)        2,215
Port Huron, IL       PIF I          1,090            0        1,090           86         1,176
Dickinson, ND        Private        1,380          380        1,000        1,273         2,273
Williston, ND        Private        1,932          538        1,394        2,978         4,372
                                 --------     --------     --------      --------     --------
                                 $ 20,218     $  5,554     $ 14,664      $  5,033     $ 19,697
                                 ========     ========     ========      ========      ========
</TABLE>


                                   (Continued)
                                       30
<PAGE>
                         NOTES TO FINANCIAL STATEMENTS


NOTE 3.      PROPERTY AND EQUIPMENT (CONTINUED)

             In connection with the transfers of the facilities, the Company
             also assumed various notes payable. The following is a summary (in
             thousands) of the notes payable assumed by the Company:


<TABLE>
<S>                                                                                         <C>
                    Carrying value of notes (including accrued
                      interest) by the Partnerships                                         $     24,186
                    Less forgiveness of debt recognized by the Partnerships                        8,595
                                                                                            ------------

                          Notes payable assumed by the Company                              $     15,591
                                                                                            ============
</TABLE>



NOTE 4.      ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

             Accounts payable and accrued liabilities (in thousands) consist of
             the following at September 30, 2001:

<TABLE>
<S>                                                                                         <C>
                     Current and continuing operating liabilities                           $      1,158
                     Accrued interest on notes payable                                               845
                                                                                            ------------

                                                                                            $      2,003
</TABLE>



NOTE 5.      NOTES PAYABLE

             Notes payable (in thousands) consist of the following at September
30, 2001:

<TABLE>
<S>                                                                                         <C>
                    Notes secured by real estate:
                         Regular mortgage notes                                             $      9,277
                         Rock Island mortgage note                                                 4,171
                         Superfirst note                                                             519
                         Reimbursement notes                                                         392
                         Related party note                                                          550
                         Other notes                                                                  50
                                                                                            ------------

                                Total secured notes                                         $     14,959

                     Tax notes                                                                       145
                                                                                              ----------

                                Total notes payable                                         $     15,104
                                                                                             ===========
</TABLE>


                                   (Continued)
                                       31
<PAGE>
                         NOTES TO FINANCIAL STATEMENTS


NOTE 5.      NOTES PAYABLE (CONTINUED)

             There are four regular mortgage notes, dated September 30, 1998,
             that bear interest at 8% per annum. Interest on each of the notes
             is payable monthly at a rate of 6% per annum. Accrued and unpaid
             interest resulting from this deferral provision increased by
             $278,309 and $185,540 respectively, during the years ended
             September 30, 2001 and 2000. As of September 30, 2001, the total
             amount of accrued and unpaid interest on these notes is $674,892.
             The notes were originally due on September 30, 2001 but were
             extended to September 30, 2002. They may be extended for additional
             periods of one year upon payment of $1,250,000 before September 30,
             2002 and $1,500,000 before September 30, 2003. On a quarterly
             basis, any portion of the 8% interest which is unpaid and 75% of
             any computed net cash flow from the properties securing the notes
             is payable. To the extent that this calculation results in a
             payment of principal, that sum is to be retained by the lender as a
             reserve for capital improvements. No amounts were computed to be
             payable under this provision during the years ended September 30,
             2001 and 2000. These notes are secured by first mortgage liens on
             properties in Dickinson, ND, Williston, ND, Fort Madison, IA and
             Hastings, NE.

             The Rock Island mortgage note, dated September 30, 1998, bears
             interest as follows: from October 1, 1998 through September 30,
             1999, the lesser of 3% per annum on the unpaid principal balance or
             computed cash flow from the Rock Island property; from October 1,
             1999 through September 30, 2000, the greater of 3% per annum on the
             unpaid principal balance or computed cash flow from the Rock Island
             property; from October 1, 2000 until maturity, the greater of 4%
             per annum on the unpaid principal balance or computed cash flow
             from the Rock Island property. For the year ended September 30,
             2001 interest payable $110,160 was computed and $62,565 was paid.
             For the year ended September 30, 2000, interest payable of $83,420
             was computed through May, 2000 and $88,719 was paid during the
             period. The note is secured by a first mortgage lien on the
             property located in Rock Island, IL and was due on September 30,
             2001 but was extended to September 30, 2002.

             By agreement with the holder of the regular mortgage notes and the
             Rock Island mortgage note, minimum interest payments required to be
             paid from June, 2000 through January, 2001 have been deferred to
             provide funds to perform substantial modifications to the property
             located in Hastings, NE. These modifications are required by local
             licensing authorities in order to continue the operation of the
             property as an assisted living facility. Accrued and unpaid
             interest pursuant to this arrangement amounted to $227,500 as of
             September 30, 2000 and to $467,870 by January, 2001. During the
             year ended September 30, 2001 $374,049 was incurred for the
             modifications required on the Hastings, NE property leaving a
             remaining balance of $93,821 deferred for further required
             modifications.


                                   (Continued)
                                       32
<PAGE>
                         NOTES TO FINANCIAL STATEMENTS


NOTE 5.      NOTES PAYABLE (CONTINUED)

             The Superfirst note and two reimbursement notes, dated September
             30, 1998, bear interest at 5% per annum. A prearranged principal
             payment of $508,000 was applied to the outstanding balance on
             November 10, 1998. No other periodic payments of interest or
             principal are required. Accrued and unpaid interest resulting from
             this deferral provision amounted to $63,873 in each of the years
             ended September 30, 2001 and 2000. On September 30, 2001 all of the
             accrued and unpaid interest of $196,905 on these notes was paid and
             their principal balance was reduced by $366,333. All of the accrued
             interest and unpaid principal is due on September 30, 2002. These
             notes are secured by first mortgage liens on properties located in
             Beatrice, NE and Port Huron, MI

             The related party note, dated September 30, 2001, bears interest at
             10% per annum. Monthly payments of interest only are required on
             the outstanding balance. The note was written in the amount of
             $1,000,000 and funded in the amount of $550,000 on September 30,
             2001. The note is payable to entities controlled by Richard J.
             Westin and Jesse A. Pittore, officers and directors of the Company,
             and is due on September 30, 2003. The note is also secured by a
             deed of trust on the property located in Cumberland, MD.

             The other secured notes consist of two notes totaling approximately
             $50,000 bearing interest at 8% per annum. No periodic interest or
             principal payments are required on these two notes. Accrued and
             unpaid interest resulting from this deferral provision increased by
             $3,976 each year during the years ended September 30, 2001 and
             2000. As of September 30, 2001, the total amount of accrued and
             unpaid interest on these notes is $26,176. All of the accrued
             interest and unpaid principal is due on September 30, 2002. These
             two notes are secured by a second mortgage lien on the property
             located in Williston, ND.

             The tax notes bear interest at 8% per annum. Payments of interest
             and principal are due semi-annually each January and July in the
             amount of $5,886 through January, 2004 and each February and August
             in the amount of $26,638 through February, 2004.

             Future maturities of notes payable (in thousands) at September 30,
2001 are as follows:

<TABLE>
<CAPTION>
                Years ending September 30:
<S>                                                             <C>
                    2002                                        $     14,464
                    2003                                                 610
                    2004                                                  30
                                                                ------------

                                                                $     15,104
</TABLE>


                                   (Continued)
                                       33
<PAGE>
                         NOTES TO FINANCIAL STATEMENTS


NOTE 6.      LEASE OBLIGATIONS

             The Company leases an emergency generator (included in property and
             equipment) at its Hastings, NE facility under a capital lease
             expiring in April 2003. The cost of the equipment and accumulated
             amortization were $46,353 and $1,500, respectively, at September
             30, 2001. During October 2001, the Company also began leasing an
             alarm system at its Hastings, NE facility under a capital lease
             that will expire in September 2004. The cost of the alarm system is
             $58,143 and will be included in property and equipment when it is
             placed in service.

             The Company also leases a total of four buses at four of its
             facilities under operating leases expiring in July 2003. Annual
             rent expense under these operating leases amounted to $59,461 in
             2001 and $9,910 in 2000.

             The following is a schedule of future minimum payments under
             capital leases (including the alarm system) and operating leases
             and obligations under capital leases (present value of future
             minimum rentals) as of September 30, 2001 (in thousands):

<TABLE>
<CAPTION>
                                                                    Capital         Operating           Total
                                                                    -------         ---------           -----
<S>                                                                <C>              <C>                 <C>
                      Years ending September 30:
                           2002                                    $     45           $    59           $  104
                           2003                                          44                50               94
                           2004                                          23                --               23
                                                                   --------           -------           ------

                                                                   $    112           $   109           $  221
                                                                                      =======           ======

                      Less alarm lease                                  (58)
                      Less amount representing interest                 (15)
                                                                   --------

                      Total obligations under capital leases       $     39
                                                                   ========
</TABLE>


NOTE 7.      TRANSACTIONS WITH AFFILIATES

             The Company contracts with Evergreen Management, Inc. ("EMI") for
             the management of its owned and operated properties. EMI is
             co-owned by Richard J. Westin and Jesse A. Pittore, directors and
             officers of the Company. As of June 1, 2001 these management
             contracts were assigned to Opus X, Inc. ("OPUS") also an affiliate
             of Westin and Pittore. Compensation for these management services
             is 4.5% of gross income paid monthly. Management fees of $473,400
             and $460,023 for the years ended September 30, 2001 and 2000,
             respectively, are included in the property operating expenses on
             the statement of operations for services provided by EMI and OPUS.
             At September 30, 2001, accounts payable includes $39,638 owed by
             the Company to OPUS. As of October 1, 2001 the rate charged by OPUS
             was reduced to 3.75% of gross income.


                                   (Continued)
                                       34
<PAGE>
                         NOTES TO FINANCIAL STATEMENTS


NOTE 7.      TRANSACTIONS WITH AFFILIATES (CONTINUED)

             The Company rents its corporate headquarters in Berkeley, CA
             pursuant to a lease between the Company and the Waterford Company,
             which is owned by members of Richard J. Westin's family. The lease
             was written for a one-year term starting October 1, 1998 at a rent
             of $2,000 per month and automatically renews unless terminated by
             either party. The lessee is responsible for limited maintenance and
             repair expenses and all utilities. The Waterford Company is
             responsible for major repairs, real estate taxes and debt service.

             For the year ended September 30, 2001 and 2000, administrative
             expenses include rent for the Company's headquarters in the amount
             of $24,000 paid pursuant to the above lease between the Company and
             the Waterford Company.

             During 1999, the Company entered into a joint venture agreement
             with entities controlled by Richard J. Westin and Jesse A. Pittore,
             directors and officers of the Company (see Note 8).

             During 2001, entities controlled by Richard J. Westin and Jesse A.
             Pittore, directors and officers of the Company, loaned to the
             Company $550,000 (see note 5).




NOTE 8.      INVESTMENT IN JOINT VENTURE

             The Company has entered into an agreement with entities controlled
             by Richard J. Westin and Jesse A. Pittore, directors and officers
             of the Company, to jointly develop, build and operate an
             Alzheimer's facility in Cumberland, MD. The agreement provides, in
             part, for the Company to contribute land located adjacent to its
             Cumberland, MD facility upon which the Alzheimer's facility is
             built. The Westin and Pittore entities have funded all of the costs
             to build, furnish and operate the facility. For its contribution of
             land, the Company will receive a 25% ownership interest and 25% of
             all net income and proceeds from the operation and sale of the
             facility. This facility began operations in August, 2000.

             The following information (in thousands) summarizes the activity of
             the joint venture since its inception through September 30, 2001:

<TABLE>
<S>                                                                                   <C>
                    Land contributed to joint venture                                 $  130
                    Cash advances to joint venture - net                                  50
                    Company's share of net (loss)                                          (5)
                                                                                      -------

                    Investment in joint venture                                       $   175
                                                                                      =======
</TABLE>


                                   (Continued)
                                       35
<PAGE>
                         NOTES TO FINANCIAL STATEMENTS


NOTE 9.      INCOME TAXES

             Income taxes consist of deferred federal income taxes of $445,000
             for the year ended September 30, 2001 and current state franchise
             taxes of approximately $13,000 for the year ended September 30,
             2000. The following is a reconciliation (in thousands) of the
             federal statutory income tax amount on income to the provision for
             income tax expense:

<TABLE>
<CAPTION>
                                                                  2001         2000
                                                                -------      -------

<S>                                                             <C>          <C>
             Federal statutory income tax (benefit) at 34%      $(1,700)     $  (476)
             State franchise taxes                                   --           13
             Valuation allowance increase during the period       2,145          476
                                                                -------      -------
                    Income tax expense                          $   445      $    13
                                                                =======      =======
</TABLE>


             A summary (in thousands) of the deferred tax assets and liabilities
at September 30, 2001 follows:

<TABLE>
<S>                                                                   <C>
             Deferred tax assets:
                    Net operating loss carryforward                   $  2,519
                    Accrued compensated absences                            20
                    Stock option compensation                              240
                                                                        ------
                                                                       $ 2,779
             Deferred tax liabilities:
                    Depreciation and property and equipment                730
                                                                        ------

             Net deferred tax assets                                   $ 2,049
                                                                        ======
</TABLE>

             SFAS No. 109, Accounting for Income Taxes, requires a valuation
             allowance to be recorded when it is more likely than not that some
             or all of the deferred tax assets will not be realized. At
             September 30, 2001, a valuation allowance for the full amount of
             the net deferred tax asset was recorded because of the
             uncertainties as to the amount of taxable income that will be
             generated in future years.

             At September 30, 2001, the Company has federal net operating loss
             carryforwards of approximately $7,410,000 that will expire as
             follows:

<TABLE>
<S>                                                    <C>
                    Amount expiring in 2018            $  410,000
                    Amount expiring in 2019               600,000
                    Amount expiring in 2020             1,400,000
                    Amount expiring in 2021             5,000,000
</TABLE>


                                   (Continued)
                                       36
<PAGE>
                         NOTES TO FINANCIAL STATEMENTS


NOTE 10.     LOSS ON DISPOSITION OF PROPERTY

             In December, 2000 the Company disposed of its property located in
             Manitowoc, WI in return for cancellation of liability for prior
             years' unpaid property taxes. The depreciated book value of the
             property disposed of was $769,000 and the liabilities cancelled
             were $143,000, resulting in a net loss of $626,000. This property
             has always been operated as an apartment house and was not part of
             the core business of the Company.


NOTE 11.     LOSS FROM WRITE-DOWN OF LONG-LIVED ASSETS

             In May 2001, the Company closed its facility located in Chanute, KS
             and offered the property for sale. In November 2001, the Company
             signed a contract to sell the property for $300,000, less estimated
             commissions and closing costs of $20,000. The write down of the net
             book value of the real and personal property of $922,000 to the net
             sales price of $280,000 resulted in the recognition of a loss of
             $642,000. For the year ended September 30, 2001 total revenues
             attributable to the property were $330,000 while total expenses
             were $430,000 resulting in a net loss before depreciation of
             $100,000.

NOTE 12.     401(K) SAVINGS PLAN

             The Company has adopted a Savings Plan effective July 1, 1998 (the
             "401(k) Plan") that is intended to qualify under Section 401(k) of
             the Internal Revenue Code. After completing twelve months of
             service, employees that are at least twenty-one years of age are
             eligible to participate in the 401(k) Plan by contributing up to
             15% of their gross income to the 401(k) Plan subject to Internal
             Revenue Service restrictions. The Company may make contributions to
             the 401(k) Plan at the discretion of the Board of Directors, but
             such contributions are not required. For the years ended September
             30, 2001and 2000, no contributions to the 401(k) Plan were made by
             the Company.

NOTE 13.     NET LOSS PER COMMON SHARE

             In accordance with Statement of Financial Accounting Standards No.
             128, Earnings per Share, the Company is required to present both
             basic and diluted loss per common share.

             For the years ended September 30, 2001 and 2000, the weighted
             average common shares outstanding is 1,000,000 shares for the
             calculation of basic loss per common share. Diluted loss per common
             share is computed on the basis of the weighted average number of
             common shares outstanding plus the effect, if any, of outstanding
             stock options using the "treasury stock" method. During 2001 and
             2000, the impact of the stock options are anti-dilutive and,
             accordingly, are not included in the calculation of diluted loss
             per common share.


                                   (Continued)
                                       37
<PAGE>
                         NOTES TO FINANCIAL STATEMENTS


NOTE 14.     EMPLOYEE STOCK INCENTIVE PLAN

             In December, 1998 the stockholders approved the adoption of the
             1997 Employee Stock Incentive Plan, a stock option plan for certain
             employees and directors. The total number of shares that may be
             issued upon the exercise of options under this plan is 250,000.
             Also under this plan, no participant may be granted more than
             100,000 shares and no awards may be granted after November 21,
             2007.

             Options to purchase up to a total of 237,164 shares of common stock
             have been granted at exercise prices ranging from $1.00 to $1.10
             per share to the officers, directors and employees of the Company.
             The options will vest as follows:

<TABLE>
<CAPTION>
                                                                        Exercise                  Date
                                                Shares                    Price                   Fully
                 Date of Grant                  Granted                 Per Share                Vested
                 -------------                  -------                 ---------                ------

<S>                                             <C>                     <C>                  <C>
                January 1, 1999                  166,666                $   1.10             July 1, 1999
                January 1, 1999                    1,000                    1.00             January 1, 2000
                January 1, 1999                   42,750                    1.00             January 1, 2003
                April 1, 1999                     18,748                    1.00             April 1, 2001
                November 10, 1999                  5,000                    1.00             November 1, 2001
                December 22, 1999                  3,000                    1.00             December 1, 2000
</TABLE>

             The stock of the Company has not been listed for sale on any public
             exchange. For purposes of accounting for compensation expense
             arising from the granting of stock options under APB Opinion No.
             25, the book value of $5.97 per share on September 30, 1998 has
             been used in the absence of any other reliable market information.
             In the case of the 166,666 options which fully vest July 1, 1999,
             the compensation represented by the difference between the $1.10
             exercise price and the $5.97 net book value is being recognized
             over the 57 months remaining of the terms of the employment
             contracts of the officers to whom the options were granted. The
             compensation attributable to the remaining 70,498 options is being
             recognized over their respective vesting periods. Total
             compensation for the years ended September 30, 2001 and 2000 under
             APB Opinion No. 25 was approximately $210,000 and $266,000.

             If the Company had used the fair value based method of accounting
             for its employee stock incentive plan, as prescribed by SFAS No.
             123, stock option compensation cost in the statement of operations
             for the year ended September 30, 2001 would have decreased by
             $171,000, resulting in a net loss of $2,090,000 and the basic loss
             per common share would have been $2.09. For the year ended
             September 30, 2000 stock option compensation costs would have
             decreased by $171,000, resulting in a net loss of $873,000 and the
             basic loss per common share would have been $0.87.


                                   (Continued)
                                       38
<PAGE>
                               AGEMARK CORPORATION
                                   SCHEDULE XI
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                               SEPTEMBER 30, 2001



<TABLE>
<CAPTION>
         Column A               Column B           Column C          Column D                 Column E                 Column F
                                                                       Costs
                                                                    Capitalized
                                                                     (Charged
                                                 Initial Cost          Off)             Gross Amount at Which         Accumulated
                                                  to Company        Subsequent       Carried at Close of Period      Depreciation
                                               -----------------        to          ----------------------------          and
        Description           Encumbrances     Land    Buildings    Acquisition     Land     Buildings     Total     Amortization
        -----------           ------------     ----    ---------    -----------     ----     ---------     -----     ------------
<S>                           <C>            <C>       <C>          <C>           <C>        <C>        <C>          <C>
Asisted Living Facility
Williston, ND..........         $ 2,550      $    74   $  3,860      $    136     $    74    $  3,996   $  4,070        $   371
Assisted Living Facility
Beatrice, NE...........             911           14      1,083           137          14       1,220      1,234            104
Assisted Living Facility
Port Huron, MI.........               *           98        902            14          98         916      1,014             79
Apartment House
Manitowoc, WI   (1)                   *          286        491          (777)
Assisted Living Facility
Chanute, KS    (2)                   --            7        868          (875)
Assisted Living Facility
Cumberland, MD.........             550          187      3,388           251          57       3,769      3,826            214
Assisted Living Facility
Rock Island, IL........           4,171          189      1,855            20         189       1,875      2,064            105
Assisted Living Facility
Fort Madison, IA.......           2,215           52      1,915            44          52       1,959      2,011            109
Assisted Living Facility
Hastings, NE...........           2,289           92      1,892           333          92       2,225      2,317            107
Assisted Living Facility
Dickinson, ND..........           2,273           36      2,091            63          36       2,154      2,190            119
                                -------      -------   --------      --------     -------    --------   --------        -------
     Totals............         $14,959      $ 1,035   $ 18,345      $   (654)    $   612    $ 18,114   $ 18,726        $ 1,141
                                =======      =======   ========      ========     =======    ========   ========        =======
</TABLE>

<TABLE>
<CAPTION>
         Column A                Column G      Column H     Column I





                                 Date of         Date
        Description            Construction    Acquired      Life
        -----------            ------------    --------      ----
<S>                            <C>             <C>           <C>
Asisted Living Facility
Williston, ND..........            1983         1/1/98       40 yr.
Assisted Living Facility
Beatrice, NE...........            1934         4/1/98       40 yr.
Assisted Living Facility
Port Huron, MI.........            1896         4/1/98       40 yr.
Apartment House
Manitowoc, WI   (1)                1927         4/1/98       40 yr.
Assisted Living Facility
Chanute, KS    (2)                 1929         4/1/98       40 yr.
Assisted Living Facility
Cumberland, MD.........            1926         4/1/98       40 yr.
Assisted Living Facility
Rock Island, IL........            1926         7/1/98       40 yr.
Assisted Living Facility
Fort Madison, IA.......            1954         7/1/98       40 yr.
Assisted Living Facility
Hastings, NE...........            1914         7/1/98       40 yr.
Assisted Living Facility
Dickinson, ND..........            1980         7/1/98       40 yr.

     Totals............

</TABLE>

(1)  Disposed of December, 2000

(2)  Written down to estimated value. Carried as property held for sale.

*    The notes totaling $911,000 are secured by a blanket mortgage on the
     properties in Beatrice, NE, and Port Huron, MI.


                                       39
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

         Not applicable.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

         As of September 30, 2001, the directors and executive officers and
their respective ages of the Company are as follows:

<TABLE>
<CAPTION>
                  NAME                      AGE                                 POSITION
                  ----                      ---                                 --------
<S>                                         <C>    <C>
Richard J. Westin......................      60    Director, Co-Chairman of the Board, Chief Executive Officer and
                                                   Secretary
Jesse A. Pittore.......................      60    Director, Co-Chairman of the Board, President
Robert R. Herrick, M.D.................      62    Director
James P. Tolley........................      58    Treasurer and Chief Financial Officer
</TABLE>

         The business experience of the Company's directors and executive
officers, including each such person's principal occupations and employment
during the last five years, is summarized below.

         Richard J. Westin has been Director, Co-Chairman of the Board of
Directors, Chief Executive Officer and Secretary of the Company since its
incorporation in April 1997. From 1986 until 1998, Mr. Westin served as
President of The Westor Financial Group, Inc., now, Opus X Inc. ("Opus"), a
company specializing in financing the development of assisted living facilities
across the county. Mr. Westin received his B.A. degree from the University of
North Carolina at Chapel Hill and his Juris Doctor degree from the University of
California's Hastings College of the Law.

         Jesse A. Pittore has been Director, Co-Chairman of the Board of
Directors, President and Chief Operating Officer of the Company since its
incorporation in April 1997. From 1986 until 1998, Mr. Pittore was Chairman of
the Board of Opus. Mr. Pittore holds a Bachelor of Science degree in Industrial
Engineering and Business Management from the University of California, Berkeley.

         Robert R. Herrick, M.D. has been a Director of the Company since
January 1998. Dr. Herrick has been in private practice in neurology in Northern
California since 1971. In 1997, he served as Chief of Staff to Doctors' Medical
Center in San Pablo, California and currently serves as President of the Board
of Governors of that hospital. Dr. Herrick received his bachelor's degree from
Oberlin College in Ohio and his medical degree from the University of Chicago
Medical School.

         James P. Tolley has been Treasurer and Chief Financial Officer of the
Company since its incorporation in April 1997. From 1988 to present, he has
served as Controller of Opus.


                                       40
<PAGE>
Mr. Tolley is a Certified Public Accountant and holds a Bachelor of Science
degree from California State University, San Francisco.

         SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Under the
securities laws of the United States, the Company's directors, executive
officers and any persons holding more than 10% of the Company's Common Stock are
required to report their initial ownership of the Company's Common Stock and any
subsequent changes in that ownership to the Securities and Exchange Commission.
Specific due dates for these reports have been established and the Company is
required to identify in this Annual Report on Form 10-KSB those persons who
failed to timely file these reports. Based on a review of the Company's records,
all of the filing requirements were satisfied for the fiscal year ended
September 30, 2001.

ITEM 10. EXECUTIVE COMPENSATION

         Pursuant to the Plan of Reorganization, for two years after the
effective date of the Plan of Reorganization, which period ended on September
30, 2000, Messrs. Westin and Pittore have agreed not to accept more than $1,000
per month in salary for their services as officers of the Company. The Plan also
provides that neither of Messrs. Westin nor Pittore may receive compensation for
his services as director of the Company except for stock options and other
perquisites as set forth in each of their employment agreements. See " --
Employment Agreements" below. Dr. Herrick, who is a nonemployee director,
receives options to purchase 1,000 shares of the Company's common stock per year
for his services as director, subject to adjustment by the Board of Directors.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                 LONG-TERM
                                                                                COMPENSATION
                                                                                    AWARDS
                                                                                    ------
                                                                                  SECURITIES
                                                       ANNUAL COMPENSATION       UNDERLYING          ALL OTHER
   NAME AND PRINCIPAL POSITION                YEAR      SALARY       BONUS       OPTIONS/SARS      COMPENSATION(1)
   ---------------------------                ----      ------       -----       ------------      ---------------
<S>                                           <C>     <C>            <C>         <C>               <C>
Richard J. Westin.......................      2001    $  12,000          --               --          $ 12,000
   Co-Chairman of the Board and Chief         2000       12,000          --               --            12,000
   Executive Officer
Jesse A. Pittore........................      2000       12,000          --               --            12,000
   Co-Chairman of the Board and President     2000       12,000          --               --            12,000
Robert R. Herrick, M.D..................      2001           --          --            1,000                --
   Director                                   2000           --          --            3,000                --
James P. Tolley.........................      2001      120,000                           --                --
   Chief Financial Officer                    2000      117,000          --               --                --
</TABLE>

----------

(1)  Car and travel allowance of $1,000 per month.

EMPLOYMENT AGREEMENTS

         Each of Messrs. Pittore and Westin have entered into employment
agreements with the Company dated as of September 30, 1998. The employment
agreements provide that from October 1, 1998 through September 30, 2000, each
shall be paid a salary at the annual rate of


                                       41
<PAGE>
$12,000. Thereafter, the salary to be paid to each shall be at the discretion of
the board of directors, but in no case shall such salary be less than $240,000
per year. The agreements also provide that each of Messrs. Pittore and Westin is
eligible for an annual incentive bonus to be granted in the discretion of the
board of directors with such bonus to be up to 100% of base salary. The
agreements provide further that the Company shall grant to each of Messrs.
Pittore and Westin options to purchase up to 83,333 shares of the Company's
Common Stock, pursuant to the Company's 1997 Employee Stock Incentive Plan.
Pursuant to the agreements, each of Messrs. Pittore and Westin are eligible for
loans from the Company up to $720,000 subject to certain terms and conditions
provided in the employment agreements.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table shows as of December 21, 2001 (i) the beneficial
owners of more than 5% of the outstanding Common Stock of the Company and their
holdings and (ii) the number of shares held by each director and each executive
officer listed in the table under the section titled "Executive Compensation"
below and all directors and executive officers as group, as reported by each
person. Except as noted, each person has sole voting and investment power over
shares indicated in the table.

<TABLE>
<CAPTION>
                                                                               AMOUNT AND NATURE OF COMMON STOCK
                                                                                      BENEFICIALLY OWNED
                                                                              --------------------------------------
                          COMMON STOCK HOLDER                                 NUMBER OF SHARES      PERCENT OF CLASS
                          -------------------                                 ----------------      ----------------
<S>                                                                           <C>                   <C>
STOCKHOLDERS
Opus X. Inc............................................................         53,537(1)                    5.4%
   2614 Telegraph Avenue
   Berkeley, California 94704

DIRECTORS AND OTHER EXECUTIVE OFFICERS
Jesse A. Pittore.......................................................        194,177(2)                   17.9
Richard J. Westin......................................................        194,178(3)                   17.9
Robert Herrick, M.D....................................................          4,131(4)                      *
James P. Tolley........................................................         24,267(5)                    2.4
Directors and Officers as a Group (4 persons)..........................        416,753(2)(3)(4)(5)          35.1
</TABLE>

----------

*    Less than 1%

(1)  Opus X Inc. ("Opus"), formerly known as Westor Financial Group, Inc., is
     jointly held by Messrs. Pittore and Westin.

(2)  Includes 26,768 out of 53,537 shares of common stock owned by Opus, of
     which Mr. Pittore owns an approximately 50% interest and 83,333 which could
     be acquired by exercising options within 60 days of December 21, 2001.

(3)  Includes 26,769 out of 53,537 shares of common stock owned by Opus, of
     which Mr. Westin owns an approximately 50% interest and 83,333 which could
     be acquired by exercising options within 60 days of December 21, 2001.

(4)  Includes 4,000 shares that Dr. Herrick could acquire by exercising options
     within 60 days of December 21, 2001.


                                       42
<PAGE>
(5)  Includes 15,417 shares that Mr. Tolley could acquire by exercising options
     within 60 days of December 21, 2001.

STOCK INCENTIVE PLAN

         In December 1998, the stockholders of the Company approved the adoption
of the 1997 Employee Stock Incentive Plan, a stock option plan for certain
employees and directors. The total number of shares that may be issued upon the
exercise of options under this plan is 250,000. Also under this plan, no
participant may be granted more than 100,000 shares and no awards may be granted
after November 21, 2007.

         Options to purchase up to a total of 237,164 shares of common stock
have been granted at exercise prices ranging from $1.00 to $1.10 per share to
the officers, directors and employees of the Company. The options will vest as
follows:

<TABLE>
<CAPTION>
                                                                EXERCISE PRICE
           DATE OF GRANT                   SHARES GRANTED          PER SHARE      DATE FULLY VESTED
           -------------                   --------------          ---------      -----------------

<S>                                        <C>                  <C>               <C>
         January 1, 1999                       166,666               $1.10         July 1, 1999
         January 1, 1999                         1,000                1.00         January 1, 2000
         January 1, 1999                        42,750                1.00         January 1, 2003
         April 1, 1999                          18,748                1.00         April 1, 2001
         November 10, 1999                       5,000                1.00         November 1, 2001
         December 22, 1999                       3,000                1.00         December 1, 2000
</TABLE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Evergreen, which is jointly owned by Messrs. Westin and Pittore,
managed all of the Company's properties under management agreements that were
substantially amended pursuant to the Plan of Reorganization through the month
of May, 2001. The Company and Evergreen entered into individual contracts for
each of the facilities owned by the Company. Each management contract's initial
term is three years, and Evergreen has the option to extend each management
contract for an additional three year term. The management fee paid pursuant to
each management contract is based on a percentage of gross revenues of the
property, with the average management fee being 4.5%. The existing contracts
were assigned to Opus X, Inc., also an affiliate of Westin and Pittore on June
1, 2001. The following table sets forth the management fees earned by Evergreen
and Opus for each property for the years ended September 30, 2001 and 2000.


                                       43
<PAGE>
<TABLE>
<CAPTION>
                                                                                           MANAGEMENT FEES
                                                                                           ---------------
                       FACILITY LOCATION (FACILITY NAME)                               2001               2000
                       ---------------------------------                               ----               ----
<S>                                                                                  <C>                <C>
Rock Island, Illinois (The Fort Armstrong)                                           $  60,162          $  56,007
Fort Madison, Iowa (The Kensington)                                                     60,640             49,137
Chanute, Kansas (The Tioga)                                                             14,834             27,461
Cumberland, Maryland (The Kensington Algonquin)                                         69,596             75,295
Port Huron, Michigan (The Harrington Inn)                                               54,149             53,484
Beatrice, Nebraska (The Kensington Paddock)                                             30,840             27,035
Hastings, Nebraska (The Kensington)                                                     54,593             51,167
Dickinson, North Dakota (The Evergreen Retirement Inn)                                  60,568             54,203
Williston, North Dakota (The Kensington)                                                66,570             60,830
Manitowoc, Wisconsin (Hotel Manitowoc)                                                   1,448              5,404
                                                                                      --------           --------
         Total                                                                        $473,400           $460,023
</TABLE>

         The Company leases its headquarters in Berkeley, California from The
Waterford Company, which is owned by members of Mr. Westin's family, for $24,000
per year and on terms and conditions that the Company's believes are at or more
favorable than prevailing market rates. See Item 2 -- "Description of Property."

         The Company has entered into an agreement with entities controlled by
Richard J. Westin and Jesse A. Pittore, directors and officers of the Company,
to jointly develop, build and operate an Alzheimer's facility in Cumberland,
Maryland. The agreement provides, in part, for the Company to contribute land
located adjacent to its Cumberland, Maryland facility upon which the Alzheimer's
facility has been built. The Westin and Pittore entities have funded or
guaranteed financing of all costs to build, furnish and operate the facility.
For its contribution of land, the Company has received a 25% ownership interest
and 25% of all net income and proceeds from the operation and sale of the
facility.

         Entities affiliated with Richard J. Westin and Jesse a. Pittore,
directors and officers of the Company, loaned the Company $550,000 on September
30, 2001 in order to pay the principal and interest payment required to extend
the due date of the $14,775,000 of notes payable maturing on that date. The note
is secured by the previously-unencumbered Cumberland, MD property. Payment of
the required principal and interest of $563,000 extended the notes to September
30, 2002.


                                       44
<PAGE>
ITEM 13.  FINANCIAL STATEMENTS AND EXHIBITS

         (a)Exhibit List.

<TABLE>
<CAPTION>
             EXHIBIT                        DESCRIPTION
             -------                        -----------
<S>                         <C>
               3.1*         Articles of Incorporation
               3.2*         Bylaws
              10.1*         Order Confirming Debtors' Second Amended Joint Plan of Reorganization dated
                            April 29, 1997
              10.2*         Amended Modification of Debtors' Second Amended Joint Plan of Reorganization
                            dated April 24, 1997
              10.3*         Debtors' Second Amended Joint Plan of Reorganization dated January 15, 1997
              10.4*         Employment Agreement between the Company and Jesse A. Pittore
              10.5*         Employment Agreement between the Company and Richard J. Westin
              10.6*         1997 Employee Stock Incentive Plan
              10.7*         Form of management contract between Evergreen Management, Inc. and the Company
              10.8**        Lease Agreement between The Waterford Company and Westor Financial Group, Inc.
              24            Power of Attorney (see page 46)
</TABLE>

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

*    Incorporated by reference to the registrant's Form 10-SB filed on January
     29, 1999.

**   Incorporated by reference to Amendment No. 1 to Form 10-SB filed on
     September 17, 1999.

         (b) Reports on Form 8-K. The registrant did not file any reports on
Form 8-K during the fourth quarter of the fiscal year covered by this Report.


                                       45
<PAGE>
                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Date:  December 28, 2001

                                                   AGEMARK CORPORATION



By  /s/ Richard J. Westin                          By  /s/ James P. Tolley
   ----------------------------                    -----------------------------
        Richard J. Westin                                  James P. Tolley
     Chief Executive Officer                           Chief Financial Officer

                                POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Richard J. Westin and James P. Tolley,
and each of them, his true and lawful attorneys-in-fact, each with full power of
substitution, for him in any and all capacities, to sign any amendments to this
report on Form 10-KSB and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact or their
substitute or substitutes may do or cause to be done by virtue hereof.

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

<TABLE>
<CAPTION>
                    Signature                                         Title                                Date
                    ---------                                         -----                                ----
<S>                                                <C>                                          <C>
            /s/ Richard J. Westin                  Chief Executive Officer and Director         December 28, 2001
-----------------------------------------------
                Richard J. Westin                  (Principal Executive Officer)


             /s/ James P. Tolley                   Chief Financial Officer (Principal           December 28, 2001
-----------------------------------------------
                 James P. Tolley                   Financial Officer and Principal Accounting
                                                   Officer)

            /s/ Jesse A. Pittore                   President and Director                       December 28, 2001
-----------------------------------------------
                Jesse A. Pittore


                                                   Director                                     December   , 2001
-----------------------------------------------                                                          --
             Robert R. Herrick, M.D.
</TABLE>

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE EXCHANGE ACT BY NON-REPORTING ISSUERS.

No such annual report or proxy material has been sent to security holders.


                                       46
<PAGE>
                                EXHIBIT INDEX TO

                          ANNUAL REPORT ON FORM 10-KSB

                             FOR AGEMARK CORPORATION





<TABLE>
<CAPTION>
          EXHIBIT                               DESCRIPTION
          -------                               -----------
<S>                                <C>
            3.1*                   Articles of Incorporation
            3.2*                   By-Laws
            10.1*                  Order Confirming Debtors' Second Amended Joint Plan of
                                   Reorganization dated April 29, 1997
            10.2*                  Amended Modification of Debtors' Second Amended Joint Plan of
                                   Reorganization dated April 24, 1997
            10.3*                  Debtors' Second Amended Joint Plan of Reorganization dated January
                                   15, 1997
            10.4*                  Employment Agreement between the Company and Jesse A. Pittore
            10.5*                  Employment Agreement between the Company and Richard J. Westin
            10.6*                  1997 Employee Stock Incentive Plan
            10.7*                  Form of management contract between Evergreen Management, Inc. and
                                   the Company
            10.8**                 Lease Agreement between The Waterford Company and Westor Financial
                                   Group, Inc.
            24                     Power of Attorney (see page 46)
</TABLE>

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

*    Incorporated by reference to the registrant's Form 10-SB filed on January
     29, 1999.

**   Incorporated by reference to Amendment No. 1 to Form 10-SB filed on
     September 17, 1999.


                                       47