Page 1

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB

        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
        EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

Commission file number:  0-7765
                         ------

                               CROWELL & CO., INC.
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

             Georgia                                             58-1021933
             -------                                             ----------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

610 Industrial Park Boulevard, Evans, GA                           30809
----------------------------------------                           -----
(Address of Principal executive offices)                          Zip Code

Issuer's telephone number including area code:  (706) 855-1099
                                                --------------

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

Securities registered pursuant to Section 12 (g) of the Act: 
                        Common Stock, Without Par Value
                        -------------------------------
                                (Title of Class)

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months 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  under  Item  405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of the  Registrant's  knowledge,  in  definitive  proxy or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

Issuer's revenues for its most recent fiscal year:  $6,954,730.

The aggregate market value of the voting stock held by non-affiliates is unknown
to  registrant.  Registrant  is unaware of any sales or  purchases  of its stock
during the 60 day period ending March 31, 1999.

The number of shares outstanding of issuer's common equity as of March 31, 1999,
is 2,520,835.

The Index of Exhibits is on page 33.

<PAGE>
                                                                          Page 2
                                TABLE OF CONTENTS

                                      PART 1                                PAGE

ITEM  1    Description of Business..........................................   3

ITEM  2    Description of Properties........................................   5

ITEM  3    Legal Proceedings................................................   7

ITEM  4    Submission of Matters to a Vote of Security Holders..............   7


                                     PART II

ITEM  5    Market for Common Equity and Related Stockholder Matters.........   8

ITEM  6    Management's Discussion and Analysis or Plan of Operation........   8

ITEM  7    Financial Statements.............................................  11

ITEM  8    Changes in and Disagreements With Accountants on Accounting and
           Financial Disclosure.............................................  24


                                    PART III

ITEM  9    Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act................  25

ITEM 10    Executive Compensation...........................................  26

ITEM 11    Security Ownership of Certain Beneficial Owners and Management...  26

ITEM 12    Certain Relationships and Related Transactions...................  28

ITEM 13    Exhibits and Reports on Form 8-K.................................  29

           Signatures.......................................................  31

           Index of Exhibits................................................  32

<PAGE>
                                                                          Page 3
                         ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

     Crowell  & Co.,  Inc.,  is a  Georgia  corporation  ("Crowell")  which  was
incorporated  in 1968. The offices of Crowell are located at 610 Industrial Park
Boulevard, Evans, Georgia, 30809. The telephone number is (706) 855-1099.

     The principal business of Crowell and its subsidiary,  Keystone Homes, Inc.
("Keystone",  together, the "Company"),  is home-building and the development of
residential  properties  for  resale.  Crowell  primarily  develops  residential
properties. Crowell's business plan is to acquire new properties for development
in  profitable  markets  based on current  and  expected  demand.  Analysis  and
acquisition of new properties are ongoing.  Crowell sold its computer  division,
United  Data  Systems  ("UDS") to Chin Yu on December  16,  1996.  Crowell  sold
Petersburg  Racquet  Club,  its pool and  tennis  facility  to Craig S. Jones on
December 31, 1997. (See Dispositions of Assets on page 4.)

     Crowell acquires and develops land for home-building  primarily in Columbia
County,  Georgia.  Columbia County is in east central Georgia and is included in
the Augusta Metropolitan  Statistical Area ("MSA").  This MSA contains Richmond,
Columbia,  and McDuffie Counties in Georgia and Aiken and Edgefield  Counties in
South Carolina.  The population of this MSA was  approximately  461,000 in 1998.
Columbia County had a population of approximately 92,000 in 1998. While Columbia
County is  primarily a suburban  and rural  community,  the  industrial  base is
growing as local political and business  leaders have made intensive  efforts to
lure new industries.  Crowell  believes  Columbia County is highly desirable for
homebuyers  for many reasons,  including the county's high quality school system
and accessibility to employment, shopping, and entertainment.

     Keystone (a wholly owned  subsidiary of Crowell) builds single family homes
on a  presold  and  speculative  basis.  Keystone  builds  in all  of  Crowell's
developments and in one of Home Sites,  Ltd.'s (a Georgia limited partnership of
which  Otis L.  Crowell,  President  and  Chairman  of the Board,  and  majority
shareholder  of  Crowell,  is  the  general  partner)  developments.  Generally,
Keystone does not build outside of Crowell or Home Sites,  Ltd.  ("Home  Sites")
developments.  The revenues of Keystone constituted 92% of the total revenues of
the Company for the fiscal year ended December 31, 1998.

     Keystone  purchases  developed lots for home  construction from Home Sites.
For the year ended December 31, 1998, such purchases were $58,000.  Crowell also
provides  management  services to Home Sites.  For the year ended  December  31,
1998, management fees earned by the Company were $69,645.

     Currently,  Keystone's  home prices  (which  include lot costs)  range from
approximately  $95,000 to $215,000.  Heated square footage in these homes ranges
from 1,200 to 3,400 square feet.  Keystone  builds single family detached homes.
Keystone uses either concrete slabs or flooring  systems in the  construction of
its homes and exterior materials may be brick, vinyl siding, or stucco.

<PAGE>
                                                                          Page 4

     Keystone's  backlog at December 31,  1998,  was  approximately  $2,900,000.
Backlog  represents the dollar amount of sales pending on signed contracts where
Keystone  has  not  completed   construction   of  the  homes  under   contract.
Construction was  approximately  36% complete on these contracts at December 31,
1998.  Management  believes all backlog at December 31, 1998,  will be completed
during 1999.

     All operations of the Company are domestic.

DISPOSITIONS OF ASSETS

     On December 16, 1996 Crowell sold United Data  Systems,  Inc.,  ("UDS"),  a
computer  software  company that  developed  software for use in the real estate
industry.  The sales price of UDS was $200,000 which was received in the form of
$80,000 in cash and a note  receivable of $120,000  which is secured by all sold
and future assets of UDS. The net book value of UDS was  approximately  $40,000.
Therefore,  Crowell recognized a gain of approximately $160,000 on the sale. The
purchaser  of UDS was Chin U. Yu  ("Chin").  There was no  substantial  material
relationship between Crowell and Chin at the time of the sale. No income tax was
generated from the sale of UDS because of the operating loss incurred by Crowell
for 1997.  Total revenue for UDS for the years ended  December 31, 1996 and 1995
was $421,199 and $562,713, respectively.

     On December 31, 1997,  Crowell sold the real estate and business  operation
known as Petersburg  Racquet Club ("PRC") to Craig S. Jones,  an individual.  No
material relationship existed between Mr. Jones and Crowell before the sale. The
purchase price of PRC was  approximately  $818,000.  This amount was received in
the form of approximately $100,000 in cash, the assumption of a mortgage loan on
PRC in the amount of approximately  $576,000, the execution of a note secured by
a second  mortgage  on PRC in favor of Crowell  in the  amount of  approximately
$129,000,  the  execution  of a note  in  favor  of  Crowell  in the  amount  of
approximately  $7,000 and the obligation to pay Crowell the accounts  receivable
of PRC at  December  31,  1997,  which  are  approximately  $6,000,  as they are
received.  The net book  value of PRC at the time of the sale was  approximately
$652,000. The Company was, and continues to be, a guarantor on the mortgage loan
assumed  by Mr.  Jones.  As a  result  the  Company  has  accounted  for the PRC
transaction  following  the  treatment  set  forth  in the  Securities  Exchange
Commission's  Staff  Accounting  Bulletins - Topic 5E (SAB Topic 5E) "Accounting
for divestiture of a subsidiary or other business operation".  Accordingly,  the
assets of PRC at the sale date have been  recorded  under the caption  Assets of
business  transferred under contractual  arrangement with a corresponding amount
recorded under  Liabilities  and deferred  credit of business  transferred.  The
$166,000 gain on sale of PRC has been separately  deferred as a deferred gain of
$30,000  and a reduction  of notes  receivable  from Mr.  Jones in the amount of
$136,000.  The Company will continue to follow this  accounting  treatment until
the amount of the  outstanding  debt which Mr.  Jones has assumed  declines to a
level which permits the Company to record the  transaction  as a sale.  Revenues
from PRC for the year ended December 31, 1997, were $298,563.


COMPETITION

     The Company competes with other  individuals and entities  involved in real
estate development and residential real estate construction,  many of which have
greater  capital  resources  than  Crowell.  Such  competitors  may have greater
diversity  in terms  of both  the  types of  properties  under  development  and
geographic  locations of  properties,  and  therefore,  are better able to avoid
adverse   developments  in  the  single  family   residential   development  and
construction business in the MSA.

     Crowell  competes with several other  developers  in Columbia  County.  Lot
prices  are  determined  by  market  conditions  because  Crowell  does not have
sufficient  market share to dictate  price.  Crowell  competes by  strategically
analyzing  housing  availability  and demand  throughout  the MSA and  acquiring
properties based on this analysis.

     Because Keystone is the primary builder in several  subdivisions  developed
by Crowell  and Home  Sites,  Keystone  is not  subject  to the lot  acquisition
problems that

<PAGE>
                                                                          Page 5

some of its  competitors  face.  Therefore,  Keystone is able to  concentrate on
building efficiencies and customer needs.  Keystone's home prices are determined
by market conditions and are affected by demand, land acquisition costs, and the
cost of labor and materials.

SOURCES AND AVAILABILITY OF RAW MATERIALS

     There is an adequate supply of building materials available in the Augusta,
Georgia area.  Major suppliers of the Company are Howard Lumber  Company,  Maner
Builders  Supply  Company,  Yohe  Plumbing,   Hutto  Plumbing,  Inc.,  Universal
Cabinets,  CSR  Concrete,  Wickes  Lumber  Company,  The Carpet  Shop,  Ferguson
Enterprises, Smith's Landscape Nursery, and Creighton Laircey.

EMPLOYEES

     As of December 31,  1998,  the Company and its  subsidiaries  had eight (8)
full time employees. The Company has one (1) commercial real estate agent.


                        ITEM 2. DESCRIPTION OF PROPERTIES

     At December 31, 1998, the principal  properties held by the Company, all of
which are located in Columbia County, Georgia, unless otherwise noted, included:

<TABLE>
<CAPTION>
         Mortgage                    Project/                                                            Mortgage
       Description               Subdivision Name      Location       Existing Use    Planned Use        Balance
-----------------------------------------------------------------------------------------------------------------
<S>                             <C>                 <C>                 <C>             <C>         <C>      
9.4 acres undeveloped land      None                Fury's Ferry Rd     None            Commercial/         None
                                                                                        Shopping Ctr

1.41 acres undeveloped land     None                The Pass            None            Commercial          None

48 developed lots               Chaparral           The Pass                            Residential         None

6 developed lots                Bakers Ferry        The Pass                            Residential $     39,000

27 developed lots               Cedar Rock          The Pass            None            Residential       96,500

Homes under construction        Bakers Ferry        The Pass            Sales                            615,383
                                                                        inventory

Homes under construction        The Boulders        The Pass            Sales                            288,000
                                                                        inventory

Homes under construction        Cedar Rock          The Pass            Sales                            578,404
                                                                        inventory

Homes under construction        Chaparral           The Pass            Sales                            409,829
                                                                        inventory

Homes under construction        Lakes & Streams     South Carolina      Sales                            202,138
                                                                        inventory

Homes under construction        Walnut Grove        South Carolina      Sales                            141,943
                                                                        inventory                     __________

         Total mortgage debt                                                                        $  2,371,197
                                                                                                    ============
</TABLE>

<PAGE>
                                                                          Page 6

     The Company holds title on the above properties in fee simple.  All land is
properly zoned for its listed  potential use.  Management  believes that Crowell
and  Keystone  are  in  compliance  with  all  wetlands,   setback,  and  zoning
regulations. Management believes that all properties are adequately insured.

     The interest  expense for the year ended December 31, 1998, on the mortgage
debt was approximately  $260,000  (including  capitalized  interest).  A similar
payment for 1999 can be expected  although  the amount  will vary  depending  on
several  factors  including lot sales and interest  rate changes.  The principal
outstanding is reduced by a certain  agreed-upon amount as each property is sold
in order for the lender to release its secured  interest in the  property  being
sold.  The  interest  rates on the  mortgages  range  from  8.25% to 8.75%.  The
development loans are renewed on an annual basis. (For additional information on
the Company's mortgage debt, see Item 6. Management's Discussion and Analysis or
Plan of Operation.)

     The  Company's  investment  in  different  types  of  real  estate  is  not
restricted except where restricted by the Company's ability to obtain financing.
See  Item  1  for  a  description  of  the  Company's  real  estate  development
activities.

POLICIES WITH RESPECT TO CERTAIN ACTIVITIES

     The following is a discussion of investment  policies,  financing  policies
and policies with respect to certain other  activities of the Company.  Although
the Company has no formal written policies with respect to such activities,  the
following  discussion  outlines the Company's  objectives and informal  policies
with respect to these  activities,  which have been  determined  by the Board of
Directors of the Company and may be changed from time to time at the  discretion
of the Board of Directors without a vote of the shareholders of the Company.

     Investment  Policies.  The Company's  primary objective with regard to real
estate is to acquire raw land in the  Augusta,  Georgia  area for the purpose of
developing the land into separate homesites and  home-building,  which homes are
built  on  a  presold  or  speculative   basis.  (See  Item  2.  Description  of
Properties.)  However,  future  development or investment  activities may not be
limited to this specific  geographic  area or to  residential  real estate.  The
Company's policy is to develop or acquire raw land or developed residential lots
where management  believes that  opportunities  exist for acceptable  investment
returns.  The Company  may expand or develop  existing  properties  or sell such
properties in whole or in part as determined by management.

     The Company may also participate with other entities in property ownership,
through joint  ventures or other types of  co-ownership.  The  Company's  equity
investments in such properties may be subject to existing mortgage financing and
other indebtedness which would have priority over the equity of the Company. The
Company may issue securities to persons in exchange for properties.  The Company
also may invest in securities of entities  engaged in real estate  activities or
securities of other  issuers,  including  for the purpose of exercising  control
over such entities, although it

<PAGE>
                                                                          Page 7

has not done so in the past  several  years.  The  Company  may  acquire  all or
substantially  all of the  securities  or assets of other  entities  where  such
investments would be consistent with the Company's investment policies.

     Financing  Policies.  The Company uses  internally  generated  and borrowed
funds to purchase real estate. In reaching such financing decisions,  management
considers traditional conventional mortgage debt-to-asset ratios. Borrowings may
be  in  the  form  of  bank  borrowings,  publicly  and  privately  placed  debt
instruments,  or purchase money obligations to the sellers of properties, any of
which  indebtedness  may be  unsecured  or may be  secured  by any or all of the
assets  of the  Company  and may have  full or  limited  recourse  to all or any
portion of the assets of the Company.  The Company has not established any limit
on the number of mortgages  that may be placed on any single  property or on its
portfolio  as  a  whole,  but  mortgage  financing   instruments  usually  limit
additional  indebtedness  on such  properties.  To the extent  that the Board of
Directors of the Company determines to sell additional capital,  the Company may
raise such  capital  through  equity  offerings,  debt  financings  or any other
method.

     Policies  with Respect to Other  Activities.  The Company has  authority to
offer and sell shares of its capital stock or other securities and to repurchase
or otherwise reacquire its shares or any other securities and may engage in such
activities  in the future,  although it has no present  intention of offering or
selling any securities.  The Company has no material  outstanding loans to other
entities or persons,  including  officers and directors.  The Company may in the
future make loans to joint  ventures in which it  participates  in order to meet
working  capital needs of the venture.  The Company has not engaged and does not
intend to engage in the future in trading,  underwriting or agency  distribution
or sale of  securities  of other  issuers.  Additionally,  the  Company  has not
invested  in the  securities  of other  issuers  for the  purpose of  exercising
control in the past three years;  however, the Company may make such investments
in the future.  The Company  intends to make  investments  in such a way that it
will not be treated as an investment company under the Investment Company Act of
1940.

                            ITEM 3. LEGAL PROCEEDINGS

     The  Company  is  not a  party  to any  legal  proceedings  except  routine
litigation that is incidental to its business.


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

     No matters  were  submitted  to a vote of the  Company's  security  holders
during the quarter ended December 31, 1998.

<PAGE>
                                                                          Page 8

                                     PART II

                      ITEM 5. MARKET FOR COMMON EQUITY AND
                           RELATED STOCKHOLDER MATTERS

     There is no public  trading  market for the  securities  of Crowell.  As of
December 31, 1998, there were  approximately  750 holders of record of Crowell's
Common Stock, without par value. No dividends have been paid on Crowell's Common
Stock for more than two years and it is  anticipated  that  Crowell will not pay
dividends in the foreseeable future.

     Crowell did not issue or sell any shares of Common  Stock  during 1998 that
were not registered under the Securities Act of 1933, as amended.


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

OVERVIEW

     The  primary   objective  of  the  Company's   management  is  to  maximize
shareholder  wealth.  The  Company  attempts to  accomplish  this  objective  by
increasing  total revenues and controlling  expenses.  Management  believes that
existing  corporate  structure  is  adequate  to  support  increased  sales.  In
addition,  management  believes  revenues  can  be  increased  most  rapidly  by
increasing home-building efforts.

     The statements in this report regarding future sales,  expenses,  and other
items  relating  to  the  future  of  the  Company  constitute  Forward  Looking
Statements under the Private  Securities  Litigation  Reform Act of 1995. Actual
results may differ  materially from the Company's  expectations as a result of a
number of factors,  including the national and local economy, market conditions,
competition,  real estate demand, availability of financing, interest rates, and
weather conditions.

RESULTS OF OPERATION

     Management  continually  monitors  inventory levels in relation to customer
demand in order to build the needed  number of homes.  Management  believes that
housing inventory needs are dynamic and that a specific  inventory level must be
matched with anticipated consumer demand. Therefore, there is no specific amount
of inventory which will always be the optimum.

     Home sales  increased by  $1,228,906  or 23.8%,  and  commercial  brokerage
commissions  decreased by $120,872 or 66% for the year ended  December 31, 1998,
as compared to the year ended December 31, 1997.

     Gross profit  percent on home sales  increased to 9.7% in 1998 from 5.4% in
1997.

     Gross profit  percent on commercial  brokerage  commissions  decreased from
34.4% in 1997 to 27.0% in 1998.

     Gross profit on lot sales increased from 52.1% in 1997 to 56.3% in 1998.

<PAGE>
                                                                          Page 9

     Salaries decreased in 1998 as compared to 1997 by $16,814 or 4.2%.

     Depreciation expense decreased by $784 or 4.6% in 1998 as compared to 1997.

     Taxes and  licenses  decreased  by $8,335 or 29.7%,  in 1998 as compared to
1997.

     Building  occupancy  decreased  by $31,678 or 45.9% in 1998 as  compared to
1997. Office expense decreased in 1998 by $152 or .2% as compared to 1997.

     Advertising and promotion  increased by $925 or 5.1% in 1998 as compared to
1997.

     Legal and accounting expenses decreased by $458 or 1.7% in 1998 as compared
to 1997.

     Communications  expenses decreased by $1,159 or 6.4% in 1998 as compared to
1997.

     Overall  operating  expenses  decreased  by  $24,746  or 3.5%  for  1998 as
compared to 1997.

     Interest income increased by $9,354 in 1998 as compared to 1997.

     Interest expense from continuing  operations increased by $3,368 or 2.3% in
1998 as compared to 1997.

LIQUIDITY AND CAPITAL RESOURCES

     The Company  expects to sell land it presently owns to meet liquidity needs
as it has done in the past.  Together  with revenues  from other  sources,  such
sales  would be  expected  to  generate  sufficient  cash to meet the  Company's
liquidity  requirements.  At December 31, 1998, available cash and proceeds from
land,  lot, and home sales were  expected to be sufficient to meet the Company's
requirements  until spring of 1999 when home sales typically improve and provide
cash for operations.

     The  Company  has  obtained   financing   historically  by  borrowing  from
conventional lending sources using land acquired for development as security for
loans.

     Current  and future  liquidity  needs are  expected to be met by use of the
proceeds  from lot and land  sales and the  proceeds  from  loans,  using  lands
purchased  for  development  as  collateral.   Existing  development  loans  and
commitments  available  to the  Company  have  been  made by  various  financial
institutions and are secured by the improved lots held for resale.  (See Item 2.
Description  of  Properties.)  The interest rates on the  development  loans are
8.25% to 8.75% in  December  1998.  Payments  of  interest  are due  monthly  or
quarterly  and a portion  of the  principal  is repaid as each lot is sold.  The
existing  loans  terminate  in the years ending  December 31, 1999 and 2000,  at
which  time all  principal  and  accrued  interest  are  payable.  There  are no
penalties for prepayment.  Management  expects to renew the development loans at
that time.

     Residential  home  construction  costs  are  financed  through  the  use of
additional  commitments  using the improved lots as collateral.  Lot acquisition
costs and home  construction  costs are  financed by  construction  loans from a
number of conventional lending sources, generally lending 90 to 95% of the costs
of the home, secured by the lot and improvements,  at rates of 8.25% to 8.75% as
of December  31,  1998.  These  loans are paid upon the sale of the home.  These
loans are negotiated and closed on a project-by-project and lot-by-lot basis.

<PAGE>
                                                                         Page 10

     Financing  arrangements for long-term needs have not been made because such
arrangements  in  the  land  development   business  are  generally  made  on  a
project-by-project  basis. Debt service on existing loans (loan balances totaled
$2,399,759 as of December 31, 1998) and funds for  operations are expected to be
met from the  proceeds  of lot sales,  land  sales,  home sales and real  estate
brokerage  commissions.  Notes  maturing in 1999 total  $2,379,005.  The Company
historically  has renewed these notes annually  although there are no assurances
that such loans will be renewed  by the  financial  institution.  The notes will
eventually  be repaid from proceeds of land,  lot, and home sales.  (See Item 7.
Financial Statements for additional details regarding notes payable.)

     The  Company's  financial  condition at December 31, 1998,  has improved as
compared to that of December 31, 1997.  Stockholders'  equity as of December 31,
1998, was $857,758 as compared to $684,689 at December 31, 1997.

     Properties  held for resale  decreased from $3,415,398 at December 31, 1997
to $2,975,611 at December 31, 1998, a decrease of $439,787, or 12.9%. Properties
held for resale will increase and decrease as management  determines  and builds
the level of inventory needed to satisfy customer demand.

     Cash increased by $51,390 or 26.7%, at December 31, 1998, from December 31,
1997.

     Receivables  decreased  from $94,108 at December  31,  1997,  to $75,548 at
December 31, 1998, a decrease of $18,560 or 19.7%,  because of  collections on a
note receivable in connection with the sale of UDS.

     Other assets  increased  from  $60,750 at December 31, 1997,  to $64,531 at
December 31, 1998, an increase of $3,781 or 6.2%.

     Notes payable decreased from $2,967,064 at December 31, 1997, to $2,399,759
at December  31,  1998,  a decrease of $567,305  or 19.1%.  Notes  payable  will
increase and  decrease in direct  proportion  to the level of housing  inventory
maintained by the Company.

     Accounts  payable  and  accrued  liabilities  decreased  from  $181,238  at
December  31,  1997,  to $145,994 at December 31, 1998, a decrease of $35,244 or
19.4%.

     The Company has net operating loss carryforwards available of approximately
$1,770,000 to offset against future federal taxable income. The maximum value of
these  carryforwards  computed at maximum  federal and state income tax rates is
approximately   $690,000.   This  amount  is  not  reflected  in  the  financial
statements.

IMPACT OF INFLATION

     Although inflationary pressures were moderate in 1998 and 1997, the Company
continues  to seek  ways to  reduce  the  impact  of  inflation.  To the  extent
permitted by competition,  the Company passes increased costs on to customers by
increasing sales prices of residential lots and homes.

SEASONALITY

     The Company typically sells more homes during the second and third quarters
of the year than during the remainder of the year.

<PAGE>
                                                                         Page 11

                          ITEM 7. FINANCIAL STATEMENTS

Report of Independent Certified Public Accountants

The following  consolidated  financial  statements of Crowell & Co.,  Inc.,  and
subsidiaries are included herein:

     Consolidated Balance Sheet - December 31, 1998

     Consolidated Statements of Operations - Years ended December 31, 1998 and
          1997

     Consolidated  Statements of Changes in  Stockholders'  Equity - Years ended
          December 31, 1998 and 1997

     Consolidated  Statements of Cash Flows - Years ended  December 31, 1998 and
          1997

     Notes to Consolidated  Financial Statements - Years ended December 31, 1998
          and 1997

<PAGE>
                                                                         Page 12

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors
Crowell & Co., Inc., and Subsidiaries
Augusta, Georgia

     We have audited the  accompanying  consolidated  balance sheet of Crowell &
Co.,  Inc.,  and   subsidiaries  as  of  December  31,  1998,  and  the  related
consolidated statements of operations,  changes in stockholders' equity and cash
flows for each of the two years in the period ended  December  31,  1998.  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  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material  respects,  the financial  position of Crowell &
Co.,  Inc., and  subsidiaries  as of December 31, 1998, and the results of their
operations  and their cash  flows for each of the two years in the period  ended
December 31, 1998, in conformity with generally accepted accounting principles.

                                            /s/ ELLIOTT, DAVIS & COMPANY, L.L.P.

Augusta, Georgia
April 13, 1999

<PAGE>
                                                                         Page 13

                      CROWELL & CO., INC., AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                             AS OF DECEMBER 31, 1998

                                     ASSETS

PROPERTIES HELD FOR RESALE
   Homes under construction and for sale                            $ 2,433,454
   Developed residential land                                           710,775
   Land held for future development                                      19,000
                                                                    -----------
                                                                      3,163,229
                                                                    -----------

CASH AND CASH EQUIVALENTS, including escrow funds of $3,984             244,054
                                                                    -----------
RECEIVABLES
   Notes                                                                 54,196
   Accounts and other                                                    21,352
                                                                    -----------
                                                                         75,548
                                                                    -----------
PROPERTY AND EQUIPMENT
   Furniture, fixtures and equipment                                    149,641
                                                                    -----------
                                                                        149,641
   Less accumulated depreciation                                        (75,874)
                                                                    -----------
                                                                         73,767
                                                                    -----------

OTHER ASSETS                                                             64,531
                                                                    -----------

ASSETS OF BUSINESS TRANSFERRED UNDER CONTRACTUAL ARRANGEMENT            606,000
                                                                    -----------

                                                                    $ 4,227,129
                                                                    ===========

The  accompanying  notes are an  integral  part of this  consolidated  financial
statement.

<PAGE>
                                                                         Page 14

                      LIABILITIES AND STOCKHOLDERS' EQUITY

NOTES PAYABLE TO BANKS                                              $ 2,399,759
                                                                    -----------
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable                                                        297,241
Accrued expenses                                                         32,387
Customer deposits                                                         3,984
                                                                    -----------
                                                                        333,612
                                                                    -----------
OTHER LIABILITIES
Liabilities and deferred credit of business transferred under
   contractual arrangement                                              606,000
Deferred gain on disposal of Petersburg Racquet Club                     30,000
                                                                    -----------
                                                                        636,000
                                                                    -----------

   TOTAL LIABILITIES                                                $ 3,369,371
                                                                    -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Capital stock:
     Preferred, voting and non-participating, without par
          value; 10,000,000 shares authorized, 1,011,899
          designated to Series A and Series B
     Series A preferred, 8% cumulative, stated value $1 per
          share; callable at $1 per share plus accumulated
          dividends, convertible into common stock at the
          rate of 1 share for 4 preferred shares; authorized
          2,000,000 shares; issued & outstanding 525,000
          shares; accumulated dividends $189,000 ($0.36 per
          share)                                                        525,000
     Series B preferred, 8% cumulative, stated value $1 per
          share; callable at $1 per share plus accumulated
          dividends, convertible into common stock at the
          rate of 1 share for 4 preferred shares; authorized
          486,899 shares; issued & outstanding 486,899
          shares; accumulated dividends $194,760 ($0.40 per
          share)                                                        486,899
     Common, without par value; 50,000,000 shares
          authorized; 2,520,835 shares issued & outstanding
          at December 31, 1998                                          696,774
   Additional paid-in capital  Preferred stock - Series A                33,648
   Accumulated deficit                                                 (884,563)
                                                                    -----------

   TOTAL STOCKHOLDERS' EQUITY                                           857,758
                                                                    -----------

                                                                    $ 4,227,129
                                                                    ===========

The  accompanying  notes are an  integral  part of this  consolidated  financial
statement.

<PAGE>
                                                                         Page 15

                      CROWELL & CO., INC., AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                              Year ended December 31, 
                                                           ---------------------------
                                                               1998            1997   
                                                           -----------     -----------
REVENUES
<S>                                                        <C>             <C>        
   Home sales                                              $ 6,389,071     $ 5,160,165
   Brokerage commissions                                        61,906         182,778
   Other income                                                136,353         138,420
   Lot sales                                                   192,400         388,300
   Land sales                                                  175,000         341,000
                                                           -----------     -----------
                                                             6,954,730       6,210,663
                                                           -----------     -----------
COST OF REVENUES
   Homes                                                     5,768,374       4,881,475
   Agent commissions                                            45,172         119,921
   Other                                                        31,577          30,117
   Lots                                                         84,000         185,923
   Land                                                         46,899         133,335
                                                           -----------     -----------
                                                             5,976,022       5,350,771
                                                           -----------     -----------
OPERATING EXPENSES
   Salaries                                                    400,446         417,260
   Depreciation                                                 17,174          17,958
   Taxes and license                                            19,768          28,103
   Building occupancy                                           37,309          68,987
   Advertising and promotion                                    19,080          18,155
   Office expense                                               88,016          88,168
   Legal and accounting                                         27,215          27,673
   Communications                                               16,842          18,001
   Completed home expenses                                      46,704          12,996
                                                           -----------     -----------
                                                               672,554         697,301
                                                           -----------     -----------

     OPERATING INCOME                                          306,154         162,591
                                                           -----------     -----------

FINANCIAL INCOME (EXPENSE)
   Interest income                                              17,559           8,205
   Interest expense                                           (150,644)       (147,276)
                                                           -----------     -----------
                                                              (133,085)       (139,071)
                                                           -----------     -----------

   INCOME FROM CONTINUING OPERATIONS                           173,069          23,520
                                                           -----------     -----------
DISCONTINUED OPERATIONS
   Loss from Petersburg Racquet Club                                --         (80,700)
                                                           -----------     -----------
                                                                    --         (80,700)
                                                           -----------     -----------

   NET INCOME (LOSS)                                       $   173,069     $   (57,180)
                                                           ===========     ===========


EARNINGS PER COMMON SHARE:
   Weighted average number of common shares outstanding      2,520,835       2,520,835
   Basic earnings per share
     Income (loss) from continuing operations              $       .04     $      (.02)
     Loss from discontinued operations                              --            (.03)
                                                           -----------     -----------

   NET INCOME (LOSS) PER COMMON SHARE                      $       .04     $      (.05)
                                                           ===========     ===========
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>
                                                                         Page 16

                      CROWELL & CO., INC., AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                     YEARS ENDED DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
                                                               Additional
                                                                 Paid-In
                                    Capital Stock Issued         Capital
                                    --------------------        ---------                     Total
                             Preferred   Preferred              Preferred    Accumulated   Stockholders'
                              Series A    Series B     Common    Series A       Deficit       Equity
------------------------------------------------------------------------------------------------------

<S>                           <C>         <C>         <C>         <C>        <C>             <C>      
BALANCE, DECEMBER 31, 1996    $525,000    $486,899    $696,774    $33,648    $(1,000,452)    $ 741,869

Net loss                            --          --          --         --        (57,180)      (57,180)
                              --------    --------    --------    -------    -----------     ---------

BALANCE, DECEMBER 31, 1997    $525,000    $486,899    $696,774    $33,648    $(1,057,632)    $ 684,689

Net income                          --          --          --         --        173,069       173,069
                              --------    --------    --------    -------    -----------     ---------

BALANCE, DECEMBER 31, 1998    $525,000    $486,899    $696,774    $33,648    $  (884,563)    $ 857,758
                              ========    ========    ========    =======    ===========     =========
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>
                                                                         Page 17

                      CROWELL & CO., INC., AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                   Years ended December 31,
                                                                 ---------------------------
                                                                     1998            1997  
                                                                 -----------     -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                              <C>             <C>         
   Net income (loss)                                             $   173,069     $   (57,180)
   Adjustments to reconcile net loss to net cash
   provided by operating activities:
      Depreciation and amortization                                   17,174          76,766
      (Gain) loss on disposal of assets                                7,386         (15,139)
      Changes in assets and liabilities:
         (Increase) decrease in:
         Properties held for resale                                  252,169          77,719
         Accounts and other receivables                              (20,766)         35,005
         Home sale notes receivable                                       --           6,316
         Other assets                                                 (3,781)        (17,418)
         Increase (decrease) in:
         Accounts payable                                            164,323         111,763
         Accrued expenses                                             (7,517)         (3,001)
         Customer deposits                                            (4,432)            932
         Deferred gain on disposal of Petersburg Racquet Club             --          30,000
                                                                 -----------     -----------
           NET CASH PROVIDED BY OPERATING ACTIVITIES                 577,625         245,763
                                                                 -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from sale of assets                                       53,672         100,000
   Purchase of property and equipment                                (51,878)       (156,944)
   Collections on notes receivable                                    39,276          26,478
                                                                 -----------     -----------
           NET CASH PROVIDED BY, USED IN, INVESTING ACTIVITIES        41,070         (30,466)
                                                                 -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from bank loans                                        4,481,906       4,190,611
   Payments of bank loans and other debt                          (5,049,211)     (4,275,738)
                                                                 -----------     -----------
           NET CASH USED IN FINANCING ACTIVITIES                    (567,305)        (85,127)
                                                                 -----------     -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                             51,390         130,170

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                       192,664          62,494
                                                                 -----------     -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                         $   244,054     $   192,664
                                                                 ===========     ===========
SUPPLEMENTARY DISCLOSURES

   Interest paid (net of amount capitalized)                     $   156,939     $   146,932
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>
                                                                         Page 18

                      CROWELL & CO., INC., AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1998 AND 1997

NOTE 1 - DESCRIPTION OF BUSINESS

     The principal  operations of Crowell & Co., Inc., and its subsidiaries (the
"Company") are development of residential properties for resale,  home-building,
and providing  commercial real estate brokerage services.  The Company acts as a
general contractor on all development and home-building.

     Crowell & Co., Inc.  ("Crowell"),  the parent company,  primarily  develops
residential properties in the Augusta,  Georgia,  Metropolitan  Statistical Area
("MSA"). Crowell also provides commercial real estate brokerage services.

     Keystone Homes,  Inc.  ("Keystone"),  a wholly owned subsidiary of Crowell,
builds  single-family and multi-family  homes on a presold and speculative basis
in the Augusta, Georgia, metropolitan statistical area.

     All operations of Crowell and its subsidiaries are domestic.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

     The consolidated  financial  statements include the accounts of the Company
and its wholly owned  subsidiaries.  All significant  intercompany  accounts and
transactions have been eliminated in consolidation. 

ACCOUNTING ESTIMATES

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

INCOME (LOSS) PER SHARE

     Income (loss) per common share is computed by dividing income  available to
common stockholders by the weighted average of the number of shares outstanding.
The preferred  dividend accrued of $80,952 is subtracted from the income or loss
from  continuing  operations and net income (loss) for the purposes of computing
the income or loss per common share regardless of whether the preferred dividend
is paid. At the option of the holder,  the preferred  stock is convertible  into
common stock at one share for every four shares  owned for a total  potential of
252,975 shares. However,  because inclusion of convertible preferred stock would
have an  anti-dilutive  effect  on the  income  (loss)  per  common  share,  the
convertible  preferred stock  conversion is excluded from the computation of the
income (loss) per common share assuming full dilution.

CASH AND CASH EQUIVALENTS

     All highly liquid  instruments with an original maturity of three months or
less are considered cash equivalents.

<PAGE>
                                                                         Page 19

RECEIVABLES

     The Company uses the allowance method for recording bad debts.  

PROPERTY AND EQUIPMENT

     Property  and  equipment  are stated at cost.  Maintenance  and repairs are
expensed as  incurred.  Improvements  that  significantly  increase the lives of
assets are capitalized and depreciated or amortized over their estimated  useful
lives on the  straight-line  and  declining-balance  methods for both  financial
reporting and income tax purposes.  Gains or losses on disposals are credited or
charged to operations.

PROPERTIES HELD FOR RESALE

     Properties  held for  resale  are  stated at the  lower of cost,  using the
specific  identification  method,  or net realizable value. Net realizable value
represents  estimates,  based on management's  present plans and intentions,  of
sale price less  development and  disposition  cost,  assuming that  disposition
occurs in the normal course of business.

     Homes  under  construction  and for sale  include  lot costs,  construction
costs,   capitalized   interest  and  significant   indirect  costs  related  to
development and  construction  activities.  Indirect costs that do not relate to
development and construction  activities,  including general and  administrative
expenses, are charged to expense as incurred.

     Developed  residential  land includes land and land  development  costs. As
each  development  phase  is  completed,   land  development  costs,   including
capitalized interest and real estate taxes when material,  are then allocated to
individual  lots  based on the total  number of lots  expected  to be  developed
within each development. 

REVENUE RECOGNITION

     The Company  recognizes  revenues on sales of residential  lots,  land, and
homes  upon a formal  closing  and  receipt  of  cash.  The  Company  recognizes
commissions earned on real estate brokerage transactions upon a formal closing.

INCOME TAXES

     The Company  records  income  taxes on the  liability  method.  This method
requires the  recognition of deferred  income taxes for the impact of "temporary
differences"  between  the  amount  of  assets  and  liabilities  for  financial
reporting purposes and such amounts as determined by tax regulations.

RECLASSIFICATIONS

     Certain prior year  information  has been  reclassified to conform with the
current year presentation.

CONCENTRATION OF RISK

     The Company operates in the Augusta,  Georgia, MSA. Therefore,  the Company
can be adversely affected by local economic  conditions.  Financial  instruments
which  potentially  subject the Company to concentrations of credit risk consist
principally of temporary cash investments. The Company places its temporary cash
investments  with high credit quality  financial  institutions.  At times,  such
investments may be in excess of the FDIC insurance limits.

<PAGE>
                                                                         Page 20

NOTE 3 - NOTES RECEIVABLE

         At year end, notes receivable consist of the following:

   Note receivable from an individual due in
     quarterly installments with interest at 8.8%,
     secured by all assets of UDS.  (See Note 9)                     $   54,196
   Note receivable from an individual due on
     December 31, 2002, interest receivable monthly,
     beginning January 31, 1999, at 8.3%, secured by PRC.               136,000
                                                                     ----------
   Less allowance for doubtful accounts                                (136,000)
                                                                     ----------
                                                                     $   54,196
                                                                     ==========

NOTE 4 - COMMITMENTS AND CONTINGENCIES

     The Company  leases  office space from the majority  stockholder  under two
leases,  each with a term of twenty (20) years, and expiring in 2009. The leases
provide that the Company pay all property taxes,  insurance and maintenance plus
an annual  rental.  The total  minimum  rental  commitment at December 31, 1998,
under these leases is $1,016,400, which is due as follows:

        Year ending December 31,
        ------------------------
                 1999                                       85,200
                 2000                                       85,200
                 2001                                       87,600
                 2002                                       90,000
                 2003                                       90,000
              Thereafter                                   578,400
                                                        ----------

                                                        $1,016,400
                                                        ==========

     The total  rental  expense for these  leases  included in the  consolidated
statements of income for the years ended December 31, 1998 and 1997, was $85,200
and $127,200,  respectively. The Company received rental income of approximately
$90,000 for both 1998 and 1997 which offsets the rental expense.

     The Company sold Petersburg  Racquet Club ("PRC") on December 31, 1997. The
buyer of PRC assumed a note  payable to the bank in the amount of  approximately
$576,000.  The  Company  remains  as a  secondary  debtor on the  assumed  note.
Therefore,  the Company  has a  contingent  liability  in the amount of the note
payable  balance in the event that the buyer of PRC fails to make payment  under
the note payable agreement.

     The  Company is  generally  involved in legal  proceedings,  arising in the
ordinary course of business,  which are covered by insurance.  In the opinion of
the Company's  

<PAGE>
                                                                         Page 21

management, none of the claims relating to such proceedings will have a material
adverse  affect on the  financial  condition  or  results of  operations  of the
Company.

NOTE 5 - NOTES PAYABLE

         At year end, notes payable consist of the following:

   To banks

   Secured by residential properties held for resale,
       maturing at various dates through 1999, at
       interest rates from prime plus 1.0% to 
       1.5% (8.5% to 10.0%).                             $2,371,197

   Secured by vehicle, at an interest rate of 8%, 
       payable by monthly installments due June
       25,2003.                                              28,562
                                                         ----------

                                                         $2,399,759
                                                         ==========

     Under  provisions  of financing  arrangements  outstanding  at December 31,
1998,  the  Company  has  unused  commitments  for  financing  of  approximately
$1,985,000.  These additional amounts are available upon request and approval of
development  progress and are subject to the same terms and obligations as those
existing  on  December  31,  1998.  The  majority   stockholder  has  personally
guaranteed all bank loans.  The president of Keystone has personally  guaranteed
all  of  Keystone's  bank  loans  which  amounts  to  additional  guarantees  of
$2,264,257.

     Maturities of debt are as follows:

       Year ending December 31,
       ------------------------

                 1999                              $ 2,378,564
                 2000                                    5,497
                 2001                                    5,953
                 2002                                    6,447
                 2003                                    3,298
                                                   -----------

                                                   $ 2,399,759
                                                   ===========

     Capitalized  interest (see NOTE 2) was  approximately  $107,000 and $76,000
for the years ended December 31, 1998 and 1997, respectively. All other interest
incurred was recognized as financial  expense in the consolidated  statements of
income.

NOTE 6 - INCOME TAX MATTERS

     For the years ended December 31, 1998 and 1997,  Crowell filed consolidated
income tax returns with its subsidiary Keystone.

     For the years ended  December  31, 1998 and 1997,  the Company  recorded no
income tax provision.  In 1997,  and previous  years,  the Company  incurred net
losses and established  valuation reserves for the entire amount of its deferred
tax assets. In 1998 the Company had net income and reduced its valuation reserve
by a similar  amount.  At December 31, 1998 the Company had a valuation  reserve
equal to its  deferred  tax asset as it had  determined  that it was more likely
than not that the  reported  asset  would not be  realized.  For the year  ended
December 31,  1997,  the Company  reported  $136,000 in income on its income tax
return that was not recorded in income for financial  reporting  purposes.  This
income relates to the note

<PAGE>
                                                                         Page 22

receivable received by the Company on the sale of PRC. (See NOTE 3 and NOTE 10.)
The Company used its net operating loss carryforward to eliminate the income tax
liability on this income.

     Deferred tax assets and liabilities at December 31, 1998 and 1997,  consist
of the following:

                                                        Years ended December 31,
                                                        ------------------------
                                                           1998          1997  
                                                        ---------     ---------
Deferred tax assets
  Federal and state net operating loss carryforwards    $ 690,000     $ 760,000
  Less valuation allowance                               (690,000)     (760,000)
                                                        ---------     ---------
Net deferred tax asset                                  $      --     $      --
                                                        =========     =========

     Remaining net operating loss  carryforwards of $1,768,804 expire in varying
amounts  between  December 31, 2002,  and December 31, 2011,  and are subject to
Internal  Revenue  Code  Section 382  limitations  relating  to a  corporation's
ability  to use net  operating  loss  carryforwards  subsequent  to a change  in
ownership. An expiration schedule is as follows:

    Year ending December 31
    -----------------------
              2002                                   $     30,902
              2003                                        597,531
              2004                                        154,945
              2005                                        294,482
              2010                                        683,502
              2011                                          7,442
                                                     ------------

                                                     $  1,768,804
                                                     ============

NOTE 7 - INDUSTRY SEGMENT DATA

     The Company  conducts its  operations in the  principal  industries of real
estate development and home-building.

     The real estate development segment consists principally of the development
of  residential  properties for resale and  construction  of  single-family  and
multi-family housing.

     The real  estate  brokerage  segment  consists  of  commission  revenue and
related expenses for primarily commercial real estate sales.

     Any significant  intersegment  revenues for the periods presented have been
eliminated. Various industry segment data is as follows:

                                                        Year ended December 31, 
                                                        ----------------------- 
                                                         1998            1997
                                                      ----------      ----------
Net sales
   Real estate development                            $6,892,824      $6,027,885
   Real estate brokerage                                  61,906         182,778
                                                      ----------      ----------
      Net sales                                       $6,954,730      $6,210,663
                                                      ==========      ==========

<PAGE>
                                                                         Page 23

Operating income
   Real estate development                            $  289,494      $  122,767
   Real estate brokerage                                  16,660          39,824
                                                      ----------      ----------
      Operating income                                $  306,154      $  162,591
                                                      ==========      ==========
Capital expenditures
   Real estate development                            $   51,878      $  156,944
   Real estate brokerage                                      --              --
                                                      ----------      ----------
      Net capital expenditures                        $   51,878      $  156,944
                                                      ==========      ==========
Depreciation and amortization
   Real estate development                            $   17,174      $   17,958
   Real estate brokerage                                      --              --
                                                      ----------      ----------
      Net depreciation and amortization               $   17,174      $   17,958
                                                      ==========      ==========
Assets employed
   Real estate development                            $4,039,511      $4,468,991
   Real estate brokerage                                      --              --
                                                      ----------      ----------
                                                      $4,039,511      $4,468,991
                                                      ==========      ==========

NOTE 8 - RELATED PARTY TRANSACTIONS

     Keystone  purchases  developed lots for home  construction from Home Sites,
Ltd.  ("Home Sites"),  an entity related by common  control.  For the year ended
December 31, 1998 such purchases were $58,000.  Crowell also provides management
services to Home Sites.  For the year ended  December 31, 1998  management  fees
earned by the Company were $69,645.

     The Company received $120,275 in real estate commissions from property sold
to Home Sites by an unrelated  party for the year ended  December 31, 1997.  For
the year ended  December  31, 1997,  an officer of the Company  purchased a home
from  the  Company.  The  sales  price  was  $172,069.  The cost of the home was
$161,918.

     As described in Note 4, the Company  leases  office space from its majority
stockholder.

NOTE 9 - FINANCIAL INSTRUMENTS

     SFAS No. 107, Disclosure About Fair Value of Financial Instruments, defines
the fair value of a financial  instrument as the amount at which the  instrument
could be exchanged in a current transaction between willing parties,  other than
in a forced or  liquidation  sale.  The following  summarizes the estimated fair
values of financial  instruments and the major methods and  assumptions  used in
estimating such amounts.

     The recorded  amounts of short term financial  instruments  (primarily cash
and cash equivalents, accounts receivable, and accounts payable) approximate the
fair values due to the relatively short period to maturity.

     The carrying  amount of the Company's  long term debt at December 31, 1998,
approximate  the fair value based upon debt  instruments  with similar terms and
conditions.

     The carrying amount of the Company's notes receivable at December 31, 1998,
approximate the fair value based upon notes with similar terms and conditions.

<PAGE>
                                                                         Page 24

NOTE 10 - DISCONTINUED OPERATIONS

     On December 31, 1997,  Crowell sold the real estate and business  operation
known as Petersburg  Racquet Club ("PRC") to Craig S. Jones,  an individual.  No
material  relationship  existed between Mr. Jones and Crowell at the time of the
sale.  The purchase  price of PRC was  approximately  $818,000.  This amount was
received in the form of  approximately  $100,000 in cash,  the  assumption  of a
mortgage loan on PRC in the amount of approximately $576,000, the execution of a
note  secured by a second  mortgage  on PRC in favor of Crowell in the amount of
approximately  $129,000,  the  execution  of a note in favor of  Crowell  in the
amount of  approximately  $7,000 and the  obligation to pay Crowell the accounts
receivable of PRC at December 31, 1997, which were approximately $6,000, as they
were  received.  As a result of the  Company  remaining  liable  on the  assumed
mortgage note, the Company has accounted for the PRC  transaction  following the
treatment set forth in the Securities  Exchange  Commission's  Staff  Accounting
Bulletins - Topic 5E (SAB Topic 5E)  "Accounting for divestiture of a subsidiary
or other business operation".  Accordingly, the $606,000 in assets of PRC at the
sale date have been recorded  under the caption  Assets of business  transferred
under  contractual  arrangement  with  a  corresponding  amount  recorded  under
Liabilities  and deferred credit of business  transferred.  The $166,000 gain on
sale of PRC has been  separately  deferred  as a deferred  gain of $30,000 and a
reduction in the notes receivable from Mr. Jones in the amount of $136,000.  The
Company will continue to follow this  accounting  treatment  until the amount of
the  outstanding  debt which Mr.  Jones has  assumed  declines  to a level which
permits the Company to record the  transaction as a sale.  Revenues from PRC for
the year ended December 31, 1997, were $298,563.


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

     Within the two year period  ended  December  31,  1998,  there have been no
changes in  independent  certified  public  accountants  or  disagreements  with
accountants on matters of accounting or financial disclosure.

     On March 10, 1999, Crowell & Co., Inc. ("Crowell"),  engaged Elliott, Davis
& Company,  L.L.P.,  to serve as  independent  auditors.  On or about that date,
Cherry,  Bekaert, & Holland,  L.L.P.,  was dismissed as independent  auditors of
Crowell.

     Cherry,  Bekaert,  & Holland's  report on the financial  statements for the
past two years did not contain an adverse opinion or a disclaimer of opinion nor
was it modified as to uncertainty, audit scope or accounting principles.

     The board of  directors  of  Crowell  approved  the  change in  independent
auditors.

     There were no disagreements with the Company's prior independent  auditors,
Cherry,  Bekaert, & Holland,  L.L.P.,  within the two-year period ended December
31, 1998 and the interim  period of January 1, 1999 through  March 10, 1999,  on
matters of accounting  principles or practices,  financial statement disclosure,
or auditing scope of procedure.

     Crowell has not consulted with Elliott, Davis & Company, L.L.P., during its
two most recent fiscal years nor during any  subsequent  interim period prior to
its engagement regarding the application of accounting principles to a specified
transaction,  either  completed or proposed,  or the type of audit  opinion that
might be rendered on the Company's financial statements.

<PAGE>
                                                                         Page 25

                                    PART III

                ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
                               AND CONTROL PERSONS

     Set forth below is certain  information as of March 31, 1999, about each of
the directors and executive officers of Crowell.

Name                       Age    Office
----                       ---    ------

Otis L. Crowell            64     Director, President and Chairman of the Board

O. Lamar Crowell, Jr.      33     Director and Vice President

Mark L. Gilliam            37     Director, Vice President, Secretary and Chief 
                                  Financial Officer

     Mr.  Crowell  has served as  President  and as a Director of Crowell or its
predecessor since 1969, and Chairman of the Board of Crowell since March 1988.

     Mr. Crowell, Jr., has served as Vice President and as a Director of Crowell
since July,  1996. Mr.  Crowell,  Jr., has served as President of Keystone Homes
since  April 1995.  For five years  prior to his  appointment  as  President  of
Keystone, Mr. Crowell served as a manager with Crowell.

     Mr.  Gilliam has served as Vice  President,  Secretary and Chief  Financial
Officer of Crowell since October 1992. 

     The term of each  officer  and  director is for one year and expires on the
third  Wednesday  in  June;  however,  the  term of each  officer  and  director
continues until his successor is elected and qualified. There is no agreement or
understanding  between any officer and director and any other person pursuant to
which any  officer or  director  was  selected  as an officer or  director.  Mr.
Crowell, Jr., is the son of Mr. Crowell.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

     Section  16(a) of the  Securities  Exchange  Act of 1934,  as amended,  and
regulations  of the SEC  thereunder  require  Crowell's  executive  officers and
directors and persons who own more than 10% of Crowell's  Common Stock,  as well
as certain affiliates of such persons,  to file initial reports of ownership and
reports of changes in ownership with the SEC. Executive officers,  directors and
persons  owning  more than 10% of  Crowell's  Common  Stock are  required by SEC
regulation to furnish  Crowell with copies of all Section 16(a) forms they file.
Based  solely on its  review  of the  copies of such  forms  received  by it and
written  representations  that no other reports were required for those persons,
Crowell believes that during the fiscal year ended December 31, 1998,  Crowell's
executive  officers,  directors  and owners of more than 10% of its Common Stock
complied with all filing requirements.

<PAGE>
                                                                         Page 26

                         ITEM 10. EXECUTIVE COMPENSATION

COMPENSATION SUMMARY

     The  following  table  summarizes  by category,  for the fiscal years ended
December 31, 1998,  1997,  and 1996,  the total  compensation  paid to the Chief
Executive  Officer of the  Company.  No other  executive  officer of the Company
received  salary and bonus for the fiscal year ended  December 31,  1998,  in an
amount in excess of $100,000:

       Name and                            Year Ended
  Principal Position                      December 31,                 Salary
--------------------------------------------------------------------------------
Otis L. Crowell                               1998                    $ 120,000
    President and                             1997                      120,000
    Chief Executive Officer                   1996                      120,000

     The directors of the Company are not compensated  for services  rendered in
such capacities.

                ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                              OWNERS AND MANAGEMENT

     The  following  table sets forth,  as of March 31, 1999,  information  with
respect to the beneficial  ownership of shares of Common and Preferred  Stock of
the Company by each person known to be the  beneficial  owner of more than 5% of
the  outstanding  shares of Common  and  Preferred  stock  and the  holdings  of
directors  and  executive  officers  individually  and  as a  group.  Beneficial
ownership  as  reported  in the table has been  determined  in  accordance  with
Securities Exchange Commission ("SEC") regulations and includes shares of Common
Stock which may be  acquired  within 60 days upon the  exercise  of  outstanding
stock options and the  conversion  of shares of Preferred  Stock of the Company.
The named  persons  have sole  voting and  investment  power with  regard to the
shares shown as owned by such persons.  Pursuant to SEC regulations,  all shares
not currently  outstanding which are subject to options or conversion privileges
exercisable  within 60 days are  deemed to be  outstanding  for the  purpose  of
computing  the "Percent of Class" held by the holder  thereof but are not deemed
to be  outstanding  for the purpose of computing  the "Percent of Class" held by
any other shareholder of the Company.

<TABLE>
<CAPTION>
                                      Common Stock      Series A Preferred    Series B Preferred     Combined Voting
                                      Beneficially      Stock Beneficially    Stock Beneficially    Power (Common and
                                     Owned (Percent       Owned (Percent        Owned (Percent     Preferred Considered
     Name and Address                 of Class)(1)         of Class)(2)          of Class)(3)      as a Single Class)(4) 
-----------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                   <C>                  <C>                    <C> 
Florice Clark(5)                          121,725                  --              486,899                  4.4%
   3554 Old Ferry Road                                                               (4.6%)                (100%)
   Martinez, GA  30907                                                                                
                                                                                                      
Otis L. Crowell*(5)                     1,876,622              87,500                  --                  68.2%
   3750 Evans to Locks Road                                                         (73.8%)               (16.7%)
   Augusta, GA  30907                                                                                 

<PAGE>
                                                                         Page 27

Mark L. Gilliam*                            1,250                  --                  --                     +
   3696 El Cordero Road                                                                                       +
   Martinez, GA  30907                                                                                
                                                                                                      
Robert M. Hunter(5)                        70,000             280,000                  --                   2.5%
   3801 High Hampton Drive                                                           (2.7%)               (53.3%)
   Martinez, GA  30907                                                                                
                                                                                                      
Dennis Stanfield                          161,436                  --                  --                   5.9%
   P.O. Box 4501                                                                                           (6.0%)
   Martinez, GA  30907                                                                                
                                                                                                      
Robert M. Hunter, Jr                       13,125              52,500                  --                     +
   3 Beech Lane                                                                         +                 (10.0%)
   Morristown, NJ  07960                                                                              
                                                                                                      
Beverly H. Taylor                          13,125              52,500                  --                     +
   688 Woodhall Abbey Court                                                             +                 (10.0%)
   Martinez, GA  30907                                                                                
                                                                                                      
Ben W. Hunter                              13,125              52,500                  --                     +
   3109 West Road                                                                       +                 (10.0%)
   Martinez, GA 30907                                                                                 
                                                                                                      
All executive officers/                 1,877,872                  --                  --                  68.2%
   directors as a group (2 persons)                                                                       (73.4%)
</TABLE>

+  Less than 1.0%
*  Executive officer or director

(1)  Based on 2,520,835 shares of Common Stock outstanding on February 29, 1998.

(2)  Based on 525,000 shares of Series A Preferred Stock  outstanding on June 8,
     1998. Holders of the Series A Preferred Stock vote on the basis of one vote
     for each four  shares of Series A  Preferred  Stock  held with  holders  of
     Common  Stock and  holders  of Series B  Preferred  Stock,  all voting as a
     single class.  The Series A Preferred Stock is not registered under Section
     12 of the  Securities  Exchange  Act of 1934,  and in  providing  ownership
     information the Company has relied on its stock transfer records, which may
     not correspond to beneficial  ownership.  To the extent that the Company is
     aware of beneficial ownership that is different from ownership as reflected
     by the stock transfer records,  such beneficial  ownership  information has
     been provided.

(3)  Based on 486,899 shares of Series B Preferred Stock  outstanding on June 8,
     1998.  Holders of the Series A Preferred  Stock vote on a one vote for each
     four shares of Series B Preferred  Stock held with  holders of Common Stock
     and holders of Series A Preferred  Stock, all voting as a single class. The
     Series  B  Preferred  Stock  is  not  registered  under  Section  12 of the
     Securities Exchange Act of 1934, and in providing ownership information the
     Company has relied on its stock transfer records,  which may not correspond
     to  beneficial  ownership.  To the  extent  that  the  Company  is aware of
     beneficial  ownership  that is different from ownership as reflected by the
     stock transfer  records,  such  beneficial  ownership  information has been
     provided.

(4)  Based on one vote per share for Common  Stock and one vote per four  shares
     for Series A and B Preferred Stock.

<PAGE>
                                                                         Page 28

(5)  The shares of Common  Stock  beneficially  owned by the  indicated  persons
     include  shares which may be acquired upon the  conversion  of  outstanding
     shares of Series A or B  Preferred  Stock,  as the case may be, as follows:
     Ms. Clark - 121,725 shares;  Mr. Crowell - 21,875 shares; and Mr. Robert M.
     Hunter - 70,000  shares;  Mr. Robert M. Hunter,  Jr. - 13,125  shares;  Ms.
     Beverly H. Taylor - 13,125 shares; and Mr. Ben W. Hunter - 13,125 shares.


             ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The Company leases its office space from Otis L. Crowell, who serves as the
President of Crowell.  On June 1, 1989, Crowell entered into three (3) operating
lease  agreements each with a term of twenty (20) years. The leases provide that
the Company will pay all  property  taxes,  insurance  and  maintenance  plus an
annual  rental fee. The Company is no longer  obligated on one lease because the
majority  stockholder  sold the  building  covered  under the  lease.  The total
minimum  rental   commitment  at  December  31,  1998,  under  these  leases  is
$1,016,400, which is due as follows:

             1999                                  $   85,200
             2000                                      85,200
             2001                                      87,600
             2002                                      90,000
             2003                                      90,000
             2004-2009                                578,400
                                                   ----------
                                                   $1,016,400
                                                   ==========

     The total  rental  expense for these  leases  included in the  consolidated
statements of income for each year ended December 31, 1998 and 1997, was $85,200
and $127,200,  respectively. The Company received rental income of approximately
$90,000 for two of the operating  leases for both 1998 and 1997 which offset the
rental expense.

     The Company sold  Petersburg  Racquet Club ("PRC) on December 31, 1997. The
buyer of PRC assumed a note  payable to the bank in the amount of  approximately
$576,000.  The  Company  remains  as a  secondary  debtor on the  assumed  note.
Therefore,  the Company  has a  contingent  liability  in the amount of the note
payable  balance in the event that the buyer of PRC fails to make payment  under
the note payable agreement.

     Keystone  purchases  developed lots for home  construction from Home Sites.
For the year ended December 31, 1998,  such purchases were $58,000  Crowell also
provides  management  services to Home Sites.  For the year ended  December  31,
1998, management fees earned by the Company were $69,645.

     The Company received $120,275 in real estate commissions from property sold
to Home Sites by an unrelated  party for the year ended  December 31, 1997.  The
President  of  Crowell  received  a real  estate  commission  of $72,165 on this
transaction.

<PAGE>
                                                                         Page 29

     For the year ended December 31, 1997, an officer of the Company purchased a
home from the Company.  The sales price was  $172,069.  The cost of the home was
$161,918.


                    ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     The exhibits listed below are filed as part of or incorporated by reference
in this  report.  Where such filing is made by  incorporation  by reference to a
previously filed report or registration  statement,  such report or registration
statement is identified in parenthesis. (See the Index of Exhibits included with
the exhibits filed as part of this report.)

      3(i)   Restated  Articles of Incorporation of the Company dated October 7,
             1995, (Exhibit 3(i) to the Company's Registration Statement on Form
             S-4, No. 33-70282,  as declared effective by the SEC on January 14,
             1995)

      3(ii)  Bylaws of the Company,  as amended  through March 15, 1995 (Exhibit
             3.7 to the  Company's  Annual  Report on Form  10-KSB  for the year
             ended December 31, 1992, as amended by Form 8 dated April 14, 1995)

      4.1    Specimen form of the Company's  Common Stock  Certificate  (Exhibit
             4.1 to the  Company's  Registration  Statement  on  Form  S-4,  No.
             33-70282, as declared effective by the SEC on January 14, 1995)

      4.2    Appendix A to the  Company's  Restated  Articles  of  Incorporation
             setting forth the rights,  preferences,  and limitations of holders
             of the Company's Class A Preferred Stock (included in Exhibit 3(i))

      4.3    Appendix B to the  Company's  Restated  Articles  of  Incorporation
             setting forth the rights,  preferences,  and limitations of holders
             of the Company's Class B Preferred Stock (included in Exhibit 3(i))

      10.1   Management Compensation Agreements
             (a)  Stock Option Agreement dated February 21, 1989, by and between
                  the Company (as successor to The Mid-South Corporation) and J.
                  W. Ivey, Jr.  (Exhibit 10.2 to the Company's  Annual Report on
                  Form 10-KSB for the year ended  December 31, 1992,  as amended
                  by Form 8 dated April 14, 1995)

      10.2   Lease  Agreement dated June 1, 1989, by and between Otis L. Crowell
             and the Company  regarding the premises  located at 2848 Washington
             Road,  Augusta,  Georgia  (Exhibit  10.13 to the  Company's  Annual
             Report on Form  10-KSB for the year ended  December  31,  1992,  as
             amended by Form 8 dated April 14, 1995)

      10.3   Lease  Agreement dated June 1, 1989, by and between Otis L. Crowell
             and the Company  regarding the premises located at 432 South Belair
             Road,  Martinez,  Georgia  (Exhibit  10.4 to the  Company's  Annual
             Report on Form  10-KSB for the year ended  December  31,  1992,  as
             amended by Form 8 dated April 14, 1995)

<PAGE>
                                                                         Page 30

      10.4   Lease  Agreement dated June 1, 1989, by and between Otis L. Crowell
             and  the  Company  regarding  the  premises  located  at  454  West
             Martintown Road, North Augusta, South Carolina (Exhibit 10.5 to the
             Company's  Annual Report on Form 10-KSB for the year ended December
             31, 1992, as amended by Form 8 dated April 14, 1995)

      10.5   Agreement for Purchase and Sale of Real Property  dated October 21,
             1995,  between the Company and Sovran Strategic  Investments,  L.P.
             (Exhibit 10.5 to the Company's  Registration Statement on Form S-4,
             No. 33-70282, as declared effective by the SEC on January 14, 1995)

      10.6   Agreement  to  purchase  business  dated May 9, 1995,  between  the
             Company and Meybohm  Realty,  Inc.  (Exhibit  10.6 to the Company's
             Annual Report on Form 10-KSB for the year ended December 31, 1995.)

      10.7   Post Closing Agreement between the Company and Meybohm Realty, Inc.
             (Exhibit 10.7 to the Company's Annual Report on Form 10-KSB for the
             year ended December 31, 1995.)

      10.8   Sub-Lease  Agreement  dated May 24,  1995,  between the Company and
             Meybohm Realty,  Inc.  (Exhibit 10.8 to the Company's Annual Report
             on Form 10-KSB for the year ended December 31, 1995.)

      10.9   Sub-Lease  Agreement  dated June 29, 1995,  between the Company and
             Healthmaster  Home Health Care, Inc. (Exhibit 10.9 to the Company's
             Annual Report on Form 10-KSB for the year ended December 31, 1995.)

      10.10  Agreement to purchase business dated December 16, 1996, between the
             Company and Chin U. Yu

      10.11  Agreement to purchase business dated December 16, 1997, between the
             Company and Craig S. Jones (filed herewith)

      11     Computation of earnings per share

      12     Subsidiaries

      27     Financial Data Schedule

b)   Reports on Form 8-K.

     The  Company  did not file a report on Form 8-K  during the  Quarter  ended
December 31, 1998.

<PAGE>
                                                                         Page 31

                                   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.

                                             CROWELL & CO., INC.

DATE:  April 15, 1999                   /s/  Otis L. Crowell
                                             -----------------------------------
                                             Otis L. Crowell, President
                                             and Chairman of the Board

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.

DATE:  April 15, 1999                   /s/  Otis L. Crowell
                                             -----------------------------------
                                             Otis L. Crowell, President and
                                             Chairman of the Board

DATE:  April 15, 1999                   /s/  Mark L. Gilliam
                                             -----------------------------------
                                             Mark L. Gilliam, Director, Vice
                                             President, Secretary and Chief
                                             Financial Officer

DATE:  April 15, 1999                   /s/  O. Lamar Crowell, Jr.
                                             -----------------------------------
                                             O. Lamar Crowell, Jr., Director

<PAGE>
                                                                         Page 32

                                INDEX OF EXHIBITS

11       Computation of earnings per share

12       Subsidiaries

27       Financial Data Schedule