I enclose for filing the Annual Report on Form 10-KSB of Mod-U-Kraf Homes, Inc.
for the year ended December 31, 1996.  The financial statements included in the
Annual Report do not reflect any change from the preceding year in any
accounting principles or practices or in the methods of application of those
principles or practices.

<PAGE>

                   SECURITIES AND EXCHANGE COMMISSION
                         Washington, D. C.  20549

                                FORM 10-KSB

      (Mark One)
     [ X ] Annual report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (Fee required)
     For the fiscal year ended  December 31, 1996
                               -------------------
     [   ]  Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No fee required)
     For the transition period from __________ to __________

                   Commission file number:   0 - 7 0 9 3

                          MOD-U-KRAF HOMES, INC.
              ----------------------------------------------
              (Name of Small Business Issuer in Its Charter)

                VIRGINIA                             54-0893908
      -------------------------------           ------------------- 
      (State or Other Jurisdiction of            (I.R.S. Employer
       Incorporation or Organization)           Identification No.)

      P. O. BOX 573, ROCKY MOUNT, VIRGINIA              24151               
    ----------------------------------------         ----------
    (Address of Principal Executive Offices)         (Zip Code)

                             703 - 483 - 0291                  
             ------------------------------------------------
             (Issuer's Telephone Number, Including Area Code)

      Securities registered under Section 12(b) of the Exchange Act:

                                   NONE    
                               ------------
      Securities registered under Section 12(g) of the Exchange Act:

                               COMMON STOCK     
                             ----------------
                             (Title of Class)

     Check whether the issuer: (1) filed all reports to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

Yes [ X ] No [   ]

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

[ X ]

     State issuer's revenues for its most recent fiscal year. $11,372,471
                                                              -----------

     State the aggregate market value of the voting stock held by non-
affiliates computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of a specified date within
the past 60 days.

                        $2,281,325 at March 1, 1997

                 APPLICABLE ONLY TO CORPORATE REGISTRANTS

     State the number of shares outstanding of each of the issuer's classes
of common equity, as of March 15, 1997.

               825,649 shares of Common Stock, $1 par value

     Transitional Small business Disclosure Format: Yes [   ] No [ X ]

<PAGE>
Item 1.    Description of Business
           -----------------------
     Mod-U-Kraf Homes, Inc. (the "Company"), was incorporated as a Virginia
corporation on August 19, 1971.  It is engaged in the business of
manufacturing and selling custom-built sectionalized single family housing
units of its own design.  The Company also customizes a commercial line of
products consisting of multi-family and diversified specialty structures. 
     The Company's sectionalized housing units, available in 58 standard
models, ranging in size from 705 square feet to 2,970 square feet for one and
two family dwellings, consist of two or more virtually complete sections
which are manufactured side by side on an assembly line.  Various designs are
available, including Victorian, Cape Cod, vacation homes, two stories and
country homes.  There are over 100 options to allow for custom choices. 
Interior designs provide for great rooms, spacious kitchen-dining-living
areas, ample closets, and fireplaces.  Multi-family projects can contain up
to 24,000 square feet and are custom designed to meet the needs of the
builder and as dictated by building site conditions (including inside and
outside painting and installation of kitchen cabinets and floor coverings). 
After completion, the units are loaded on specially designed transporters for
delivery to the building site where they are off-loaded to a permanent
foundation previously prepared by the purchaser.  After the sections are off-
loaded, either by crane or rollers, they are secured together by a "zip up"
procedure.  The purchaser may then complete the sections by making plumbing
and electrical connections, carrying out final grading and landscaping, and
adding brick veneer, if desired.  Prices on our products can vary depending
upon the region into which they are to be shipped.  The Company believes that
when completely erected on a lot, landscaped and ready for occupancy, its
single family homes retail from $55,000 to $250,000 or more depending on the
cost of the lot.  The prices of multi-family projects can range up to
$1,300,000 or more depending on the total size of the project.
     During the past several years, the Company, utilizing the manufactured
section concept, has increasingly entered into a new commercial building
market consisting of condominiums, town-house apartments, dental clinics,
medical office buildings, churches, motels and many other commercial
structures adaptable to the Company's manufacturing methods and capabilities.
     During 1996, the Company produced 280.5 units as compared to 222.0 units
in 1995.  Gross sales of $11,372,470 and $9,083,419 in 1996 and 1995 were
comprised of 265.5 and 219.5 units sold, respectively.
     The chief raw materials used in production are lumber and lumber
products, including plywood, moldings, door and window assemblies:  general
building materials such as roofing, insulation, wallboard, fixtures and
hardware; and heating equipment and other appliances.  These materials are
presently available at competitive prices through several suppliers serving
the area, and the Company has not experienced and does not foresee dependency
upon any single source of supply for raw material.  The price of lumber has
been subject to significant fluctuations which may affect the Company's
profit margin and the prices it charges for its products.  The Company passes
increased cost on to its customers by increasing sales prices from time to
time.
     At March 1, 1997, the Company had a backlog of un-shipped orders for
58.0 units (representing approximately $2,535,317 in gross sales). 
Comparable backlog figures at March 1, 1996 and 1995 were 51.5 units
(representing approximately $1,956,834 in gross sales) and 59.0 units
(representing approximately $2,290,123 in gross sales), respectively.  The
Company believes that approximately 65% of the orders comprising the current
backlog are firm.  The Company believes that 35% of the back log balance may
not be treated as firm due to a variety of factors, including unavailability
of financing for its customers, title defects or objections with respect to
land upon which customers expect to erect their homes, and weather conditions
which can affect delivery against contracts.  The average delay between
booking and shipment of an order is approximately 75 days.
     Company units are sold primarily in Virginia, Maryland, West Virginia
and North Carolina, although some sales have been made in South Carolina,
Kentucky, Ohio, Delaware, Tennessee, Pennsylvania and New Jersey.  The
Company offers its products primarily to home builders, land developers and
realtors, although the company has acted as "turnkey" contractor in some
instances, selling several sectionalized homes directly to retail customers
and, depending on the contract, either "zipping-up" the units or completing
the entire home to final grade.  Orders consist primarily of from one to
three homes, although larger orders are accepted if received.
     The Company does not have long-term agreements with any customer and
does not have any single customer or large group of customers upon which a
material part of its business depends.  Sales terms are flexible, varying
from cash 15 days prior to delivery to a completely secured sale with a
nominal down payment, in which the Company provides construction financing
pending sale of the units and disbursement of financing by the permanent
lender.   The Company provides permanent financing in connection with a small
number of sales. (See Note 3 of Item 7, Financial Statements)
     The Company does not have any material patents, licenses, franchises or
concessions, has not made any material expenditures for research and
development during the past three years and does not anticipate doing so. 
The Company employs approximately 22 persons on its administrative and office
staff, 15 persons on its sales staff and 120 persons on its production and
delivery staff.  None of its employees is represented by a labor union.  The
Company's employment level has fluctuated, and will continue to fluctuate
with the demand for code-complying manufactured housing.  Production
employment levels have been stable for the last two years and is expected to
remain stable with the new manufacturing facility in operation.
     Competition in the housing industry is intense.  The Company competes
not only with local, regional and national producers of manufactured housing,
including modular, panelized and mobile homes, but also with local, regional
and national home builders as well.  Many of these competitors have financial
resources and productive facilities which far exceed those of the Company. 
Moreover, five manufactured housing firms have plants located in or near
Rocky Mount, Virginia, and the Company must accordingly compete with these
firms for labor as well as sales.
     To the extent weather conditions affect the construction or erection of
houses, the business of the Company can be seasonal, with a larger portion of
sales and shipments of its units occurring in the warmer months of the year,
generally from May through November, than during the winter months.
     To the best of its knowledge, the Company is in compliance with all
applicable regulations and does not currently foresee that material capital
expenditures will be necessary to maintain such compliance or that future
compliance will significantly affect the earnings or competitive position of
the Company.
     The marketing direction of the Company has recently developed two
thrusts.  While the overall trend has been towards larger structures, the
Company has developed a series of smaller, lower-cost units to enable it to
compete for entry-level housing and governmental loan programs.  Improvements
made in manufacturing facilities have put the Company in the position to
produce both large and smaller units efficiently.
     The products of the Company are manufactured at two facilities in Rocky
Mount, Virginia.  See Item 2, below.  The existing plant has a production
capacity of 5 units per week and the new facility will have a production
capacity of 15 units per week.

Item 2.   Description of Property.
          -----------------------

     The Company's production and transportation office and manufacturing
plant are located in a one-story steel building, approximately 34 years old,
on State Highway 40, one mile east of Rocky Mount, Virginia.  The building is
insulated and heated with a concrete floor and totals 20,000 square feet. 
Production and transportation offices, located within the plant facility, are
air conditioned and contains approximately 1,000 square feet of floor space. 
In 1982 there was a one story metal and wood plumbing and electrical storage
addition with 700 square feet and a one story metal and wood break room
addition, heated and air conditioned, with 700 square feet completed.  In
1984 construction was completed on a 7,200 square foot addition to the plant. 
In 1988 a one story metal and wood addition containing a supply room and a
"Binks" paint booth was completed containing 1,600 square feet.  In 1993 a
one story metal building that was built in 1984 which has a concrete floor
and 16' overhead doors and has 3,600 square feet was converted to a component
manufacturing area.  A small portion of the plant is used for storage of
materials which will not withstand exposure to the elements.  Total
manufacturing area contains approximately 33,800 square feet of space.
     Four enclosed storage buildings on the property adjacent to the
manufacturing plant are used to store materials.  These buildings are wood
and metal construction with concrete floors and either three or four walls
enclosed.  Total enclosed storage is 17,370 square feet.
     The corporate headquarters building, including the engineering office,
which is located adjacent to the Rocky Mount plant, was completed and
occupied in December 1973 and contains over 7,800 square feet of office
space.  The building was constructed in the Rocky Mount plant from seven
single modules completed in the plant with plant installation of wiring,
lighting, plumbing, carpet, vinyl, and rest rooms with ceramic walls and
floors.
    The property is served by a rail siding.  The property includes
approximately seven acres of land that provides for, in addition to the plant
buildings, storage buildings and corporate headquarters building, room for
employee and visitor parking, storage of completed sections pending shipment
and two sales models.
     In October 1977, the Company purchased a 10-acre parcel adjacent to its
Rocky Mount facilities for possible future expansion.  In March 1993, an
additional 16.92 acres were purchased adjacent to the 10 acre parcel.  In
October 1994 the Company exchanged, at no cost, 20.229 acres of the total
26.92 acres for 17.983 acres in the Franklin County/Town of Rocky Mount,
Virginia Industrial Park.  After the exchange, there are remaining 6.691
acres owned by the Company adjacent to its Rocky Mount facilities. 
     The 7 acre parcel that contains the manufacturing, storage and office
buildings are separated from the 6.691 acre parcel referred to above by a
rail line.
     The Company's second manufacturing facility is located on 17.983 acres
in the Franklin County/Town of Rocky Mount, Virginia Industrial Park.  The
facility is a steel building, insulated with a standing rib roof.  The
104,325 square foot building has a 32'6" eave height and has a sprinkler
system throughout.  There is 6,680 square feet of mezzanine for additional
storage and 800 square feet of office space inside the building.  The size of
the building allows for storage of all materials for the construction of the
units, reducing damage to inventory due to movement and weather.  The entire
floor area is covered by 6" of finished concrete.  There are 10 large doors
of which 8 are designed for "drive" through and 2 are "dock" doors for
receiving materials.  There are five 4 ton bridge cranes installed to assist
in the "off-line" production of various components such as floor systems,
walls, and roof systems.  The entire building is heated by propane with an
air rotation system.  To allow for future expansion of the building, an
additional 8,750 square feet of finished floor and grade beams have been
added to the building.  Three storm water run-off retention ponds are located
on the property.  All roof drains on the building have been "piped" to those
ponds.  The remainder of the finished lot is covered by a 6" compacted
surface with approximately 42,000 square yards of high traffic area underlaid
with a surface retention fabric.  The property is fenced for security
purposes.
     The Company's transportation and delivery fleet consists of six tractor
cabs and 52 trailers, all of which are owned by the Company.  An additional
4 tractor cabs were purchased in 1996 and are expected to be put into
service by the end of the first quarter of 1997.  To plan for our increased
production and more demanding state transportation regulations, the Company
has ordered four additional modular transporters to be delivered in May 1997.
     The Company considers its properties and equipment generally to be well
maintained and in good condition, and adequate for the needs of its business.

Item 3.   Legal Proceedings.
          ------------------
     None

Item 4.   Submission of Matters to a Vote of Security Holders.
          ---------------------------------------------------
     None

Item 5.   Market for Common Equity and Related Stockholder Matters.
          --------------------------------------------------------

     The Corporation's common stock is traded in the over-the-counter market. 
The number of shareholders as of March 6, 1997 was 415.  The range of bid and
ask quotations and dividends declared for the last two calendar years are
listed below.
     
                              QUOTATIONS ON COMMON STOCK
                    
                    1996                          1995                          
         --------------------------   ---------------------------    Dividends  
             BID            ASK            BID            ASK        Declared
         ------------  ------------   -------------  ------------   ------------
         High    Low    High    Low    High    Low    High    Low   1996   1995
         -----  -----  -----  -----   ------  -----  -----   -----
First    3 1/2    --   4 1/2  4 1/4   4       3 1/2  4 1/2    --    $0.03  $0.03
Second   4 1/8  3 1/2  4 7/8  4 1/4   4       3 3/4  4 1/2   4 1/8  $0.03  $0.03
Third    5 --   4 1/8  6 --   4 7/8   3 3/4   3 1/2  4 1/2    --    $0.03  $0.03
Fourth   5 --     --   6 --     --    3 1/2    --    4 1/2    --    $0.03  $0.03

Source:  Wheat, First Securities, Inc.

For the past 77 consecutive quarters a quarterly dividend of $0.03 per share of
common stock has been declared.  The Company presently expects to pay dividends
in the future as earnings permit.  The quotations herein reflect inter-dealer
prices, without mark-up, mark-down or commission, and may not represent actual
transactions.

Item 6.   Management's Discussion and Analysis or Plan of Operation.
          ----------------------------------------------------------

     1996 net sales of $11,372,471 were 25.20% higher than 1995 net sales of
$9,083,419.  Our total units sold increased by 20.96% over last year.  This
increase is due to the additional production from our new facility that went
into operation in August 1996.
     Gross Profit percentage declined in 1996 to 24.15% from 29.17% in 1995
and 27.27% in 1994.  This is also due to the start-up of our new production
facility.  We have had increased manufacturing and payroll cost as we bring
production up to our desired level.
     Despite the increase in production costs, we have kept Selling, general and
administrative expenses at the same level as prior years.  Their percentages
were 21.30% in 1996 compared to 23.20% and 22.14% for 1995 and 1994,
respectively.  To date we have not had any significant increases in staffing
requirements or overhead expenses in the Selling, general or administrative
expense area as we made the transition into our new manufacturing facility.  As
volume increases, we anticipate adding administrative staff as the increased
workload.
     Interest income has decreased due to the commitment of our cash to the new
plant startup.  Rental income was reduced sharply in 1996 with the sale of our
remaining Ski View Complex units. In addition, our new long term debt has added
$64,000 in interest expense.  We anticipate interest expense to be approximately
$114,000 in 1997 if interest rates remain stable.
     Revenues and profits should show a significant increase in 1997 as we 
realize the benefits of our increased production capacity.  There were no other
significant variances.

Capital Resources and Liquidity

     Total funds generated were sufficient to meet the requirements for plant
and equipment, debt retirement and dividends.  By virtue of the cash and
accounts receivable levels, the company feels that it has adequate liquidity
for continued successful operations.
      The Company completed and put into operation our new manufacturing 
facility in August 1996.  The cost of the 104,000 sq. ft. facility, including
improvements and equipment was approximately $2,800,000 which was financed by
an Industrial Development Bond Issue.  The debt associated with this issue has
a remaining life of 18 1/2 years and bears interest at a variable rate based on
variable, tax exempt bonds.  At December 31, 1996, the actual interest rate
was 4.1%.
     The Company believes that the effect of inflation on the results for the
periods presented is not material.

Item 7.   Financial Statements.
          ---------------------

                  MOD-U-KRAF HOMES, INC. AND SUBSIDIARY
                       CONSOLIDATED FINANCIAL REPORT
                             December 31, 1995

                              C O N T E N T S

                    INDEPENDENT AUDITOR'S REPORT ON                        
                       THE FINANCIAL STATEMENTS

                    FINANCIAL STATEMENTS
                      Consolidated Balance Sheets  
                      Consolidated Statements of Income
                      Consolidated Statements of Stockholders' Equity
                      Consolidated Statements of Cash Flows
                      Notes to Consolidated Financial Statements 

<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Stockholders of
Mod-U-Kraf Homes, Inc. and Subsidiary
Rocky Mount, Virginia

     We have audited the accompanying consolidated balance sheets of Mod-U-
Kraf Homes, Inc. and Subsidiary as of December 31, 1996 and 1995, and the
related consolidated statements of income, stockholders' equity and cash
flows for the years ended December 31, 1996, 1995, and 1994.  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 Mod-U-
Kraf Homes, Inc. and Subsidiary as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for the years ended December
31, 1996, 1995 and 1994 in conformity with generally accepted accounting
principles.

                                  Brown, Edwards & Company, L.L.P.

                                    CERTIFIED PUBLIC ACCOUNTANTS

Roanoke, Virginia
January 24, 1997

<PAGE>            MOD-U-KRAF HOMES, INC. AND SUBSIDIARY

                       CONSOLIDATED BALANCE SHEETS
                       December 31, 1996 and 1995

            ASSETS                          1996            1995 
CURRENT ASSETS
  Cash and cash equivalents            $  1,077,270     $1,426,738
  Certificates of deposit                   200,000        689,000
  Trade and other receivables                52,928         63,866
  Inventories (Note 2)                    2,358,346      1,368,766
  Notes receivable, current portion
       (Note 3)                             796,721        882,234
  Income taxes receivable (Note 7)           46,123            -
  Prepaid expenses                           65,940         67,506
                                          ---------      ---------
            Total current assets          4,597,328      4,498,110

LONG-TERM NOTES RECEIVABLE (Note 3)         192,906        221,418

PROPERTY AND EQUIPMENT, at cost less 
 accumulated depreciation (Note 4)        3,893,831      2,245,627
OTHER ASSETS 
  Deferred taxes (Note 7)                   486,139        508,239
  Cash surrender value of officers' life 
  insurance                                 116,227         95,440
  Reimbursement account (Note 6)            152,706        145,516
  Earnings on unused bond proceeds (Note 6) 105,474         58,124
  Debt issue costs                           73,310         73,030
                                          ---------      ---------
                                         $9,617,921     $7,845,504
                                          =========      =========
                  LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Current maturities of long-term debt 
    (Note 6)                           $    150,000     $  150,000
  Current portion of post-retirement 
    benefits (Note 5)                        66,490         75,366
  Accounts payable, trade and other 
    liabilities                             525,228        356,706
  Accrued compensation                      201,121        232,026
  Customer deposits                         293,655         23,315
  Income taxes payable (Note 7)                  -          60,364
                                          ---------      ---------
            Total current liabilities     1,236,494        897,777
LONG-TERM POST-RETIREMENT BENEFITS 
 (Note 5)                                 1,080,696      1,130,822
LONG-TERM DEBT (Note 6)                   2,639,755      1,234,514
COMMITMENTS AND CONTINGENCIES (Notes 6 
 and 12)                                        -                -
                                          ---------      ---------
            Total liabilities             4,956,945      3,263,113
                                          ---------      ---------
STOCKHOLDERS' EQUITY 
  Common stock, $1 par value, 
   2,000,000 shares authorized; shares 
   issued and outstanding 825,649 in 
   1996 and 1995                       $    825,649     $  825,649
  Additional paid-in capital                459,671        459,671
  Retained earnings                       3,375,656      3,297,071
                                          ---------      ---------
                                          4,660,976      4,582,391
                                          ---------      ---------
                                       $  9,617,921     $7,845,504
                                          =========      =========

The Notes to Consolidated Financial Statements 
  are an integral part of these statements.

<PAGE>              MOD-U-KRAF HOMES, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF INCOME
                Years Ended December 31, 1996, 1995, and 1994     

                                 1996         1995          1994
                              ----------   ---------     ---------
Net sales                    $11,372,471  $9,083,419    $9,288,807

Cost of goods sold (Note 13)   8,625,822   6,433,361     6,755,710
                              ----------   ---------     ---------
         Gross profit          2,746,649   2,650,058     2,533,097

Selling, general and 
  administrative expenses      2,423,006   2,107,624     2,056,209
                              ----------   ---------     ---------
         Operating income        323,643     542,434       476,888 

Post-retirements benefits 
  expense (Note 5)               101,877     127,010       114,749

Non-operating income, net 
  (Note 11)                       68,365     192,085       192,845
                              ----------   ---------     ---------
  Income before income taxes     290,131     607,509       554,984 

Federal and state income tax
  expense (Note 7)               112,468     228,685       246,780 
                              ----------   ---------     ---------
            Net income       $   177,663  $  378,824    $  308,204 
                              ==========   =========     =========

Earnings per share           $       .22  $      .46     $     .38 
                              ==========   =========      ========

The Notes to Consolidated Financial Statements 
  are an integral part of these statements.

<PAGE>               MOD-U-KRAF HOMES, INC. AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 Years Ended December 31, 1996, 1995, and 1994

                          Common   Additional   Total       Total
                          Stock      Paid-in   Retained  Stockholders
                         ($1 Par)    Capital   Earnings     Equity
                         --------- ---------- ---------- -----------        
Balance, Dec. 31, 1993   $813,655  $440,440  $2,806,871  $4,060,966

  Net income                  -         -       308,204     308,204
  Dividends paid 
  ($.12 per share)            -         -      ( 98,135)   ( 98,135)
  Other                  (      6) (     19)         25         -   
                          -------   -------   ---------   ---------
Balance, Dec. 31, 1994    813,649   440,421   3,016,965   4,271,035

  Net income                  -         -       378,824     378,824

  Dividends paid 
  ($.12 per share)            -         -      ( 98,718)   ( 98,718)

  Issuance of 12,000 
  shares of                                
  common stock             12,000    19,250         -        31,250 
                          -------   -------   ---------   ---------         
Balance, Dec. 31, 1995    825,649   459,671   3,297,071   4,582,391

  Net income                   -         -      177,663     177,663

  Dividends paid
  ($.12 per share)             -         -      (99,078)    (99,078)
                          -------   -------   ---------   ---------
Balance, Dec. 31, 1996   $825,646  $459,671  $3,375,656  $4,660,976
                          =======   =======   =========   =========

The Notes to Consolidated Financial Statements
  are an integral part of these statements.

<PAGE>             MOD-U-KRAF HOMES, INC. AND SUBSIDIARY

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
               Years Ended December 31, 1996, 1995, and 1994

                                   1996         1995        1994
                                ---------    ---------   ---------
OPERATING ACTIVITIES
  Net income                   $  177,663   $  378,824  $  308,204
  Adjustments to reconcile net
   income to net cash provided
   by operating activities:
    Depreciation and 
      amortization                286,333      163,912     151,701
    Deferred taxes                 22,100    (   9,631)     52,408
    Loss (gain) on sale 
      of equipment                    170          993   (  11,553)
    Increase in cash value of 
      life insurance            (  20,787)   (  15,517)  (  22,561)
    Adjustment to post-
     retirement benefits        (  59,002)   (  47,303)  (  53,889)
    Change in certain current 
     assets and liabilities:
       (Increase) decrease in:
         Trade and other 
           receivables             10,938       92,295   (  71,717)
         Inventories            ( 989,580)   ( 161,811)    266,473
         Income tax receivable  (  46,123)          -           -
         Prepaid expenses           1,566        3,808   (  26,200)
       (Decrease) increase in:
         Accounts payable, trade
           and other liabilities  168,522    (  27,859)     88,818 
         Accrued compensation   (  30,905)   (   2,769)     70,537 
         Customer deposits        270,340    ( 125,234)     99,601
         Income taxes payable   (  60,364)      23,322      31,191
                                ---------    ---------   ---------
          Net cash provided by
           operating activities ( 269,129)     273,030     883,013 
                                ---------    ---------   ---------
INVESTING ACTIVITIES
  Proceeds from sale of
    equipment                         -             -       13,900
  Purchase of property and 
   equipment, net of debt
   incurred 1996 $1,554,961:
   1995 $1,311,484; 1994 $-0-   ( 379,746)   ( 201,250)  ( 140,481)
  Principal received on notes 
  receivable                      820,271    1,675,875   1,324,245
  Notes receivable arising 
    from sales                 (  706,246)  (1,092,480) (1,961,384)
  Decrease (increase) in 
    certificates of deposit       489,000   (  389,000)    300,000
  Sale (purchase) of U.S. 
    Treasury Note                     -        204,935  (  204,935)
                               ----------    ---------   ---------
   Net cash provided by (used
    in) investing activities      223,279      198,080  (  668,655)
                                ----------    ---------   ---------
FINANCING ACTIVITIES
  Proceeds from sale of 
    common stock                       -        31,250          -
  Payments on long-term debt    ( 150,000)          -           -
  Cash dividends paid           (  99,078)   (  98,718)  (  98,135)
  Debt issue costs, net of debt
    incurred, 1995 $73,030            -            -           -
  Funding of reimbursement 
    account                     (   7,190)   ( 145,516)        -
  Earnings on unused 
    bond proceeds               (  47,350)   (  58,124)        -
                               ----------    ---------   --------- 
      Net cash used in 
       financing activities     ( 303,618)  ( 271,108)  (   98,135)
                               ----------    ---------   ---------
      Increase in cash and
       cash equivalents         ( 349,468)    200,002      116,223

CASH AND CASH EQUIVALENTS 
  Beginning                     1,426,738   1,226,736    1,110,513
                                ---------   ---------    ---------
  Ending                       $1,077,270  $1,426,738   $1,226,736
                                =========   =========    =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW 
  INFORMATION
  Cash payments for:
    Income taxes, net of
      refunds received         $  218,955  $  214,783   $  163,181
                                =========   =========    =========

The Notes to Consolidated Financial Statements 
  are an integral part of these statements.

<PAGE>             MOD-U-KRAF HOMES, INC. AND SUBSIDIARY

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              December 31, 1996

Note 1.  Nature of Business and Significant Accounting Policies

         Nature of Business:
         ------------------
         The Company is engaged in the business of manufacturing and selling
         sectionalized building units of its own design.  The Company also
         customizes a commercial line of products consisting of multi-family
         and diversified specialty structures.  The units are sold primarily
         to home builders, land developers and realtors in Virginia,
         Maryland, West Virginia and North Carolina.

         In some cases, the Company provides short-term construction financing
         which is generally limited to 75 to 80 percent of the estimated fair
         market value of the completed property.  The Company retains a
         security interest in the property until the contract is paid.  The
         Company's wholly-owned subsidiary developed a small condominium
         complex in the ski resort area of Gatlinburg, Tennessee and holds
         mortgage notes for certain units sold.  The mortgages were limited
         to 90 percent of the fair market value of the properties at the time
         of sale, however, due to market declines, the mortgage balances may
         exceed 90 percent of the current fair market value of the related
         property.  The Company's exposure to loss on these contracts is
         limited to the difference between the receivable and the value of
         the collateral.  The Company has not experienced any significant
         loss on the subsequent sale of repossessed collateral.

         Principles of Consolidation:
         ---------------------------
         The consolidated financial statements include the accounts of the
         Company's wholly-owned subsidiary, Mountain Resort Building Systems,
         Inc.  All significant intercompany accounts and transactions have
         been eliminated.

         Cash and Cash Equivalents:
         -------------------------
         For purposes of reporting cash flows, the Company considers most
         highly liquid investments with an original maturity of three months
         or less to be cash equivalents. Certificates of deposit, regardless
         of maturity, are not considered cash equivalents.

         The Company maintains its cash accounts in commercial banks located
         in Virginia.  Accounts in each bank are guaranteed by the Federal
         Deposit Insurance Corporation (FDIC) up to $100,000 per bank.  A
         portion of the Company's cash balance is uninsured at year end.
 
         Valuation of Trade Receivables:
         ------------------------------
         Trade receivables are stated at face amount with no allowance for
         doubtful accounts because probable uncollectible accounts are
         immaterial.

         Inventories:
         -----------
         Raw materials are stated at the lower of cost (determined on a 
         first-in, first-out basis) or market.  Work in progress and finished
         goods are stated at the lower of average cost determined on a
         standard cost basis) or market.  Land and units held for sale are
         stated at the lower of cost (determined on a specific property 
         basis) or market.

         Depreciation:
         ------------
         Depreciation is provided principally on the straight-line method
         over the estimated useful lives of the depreciable assets for
         financial reporting purposes. Statutory methods and lives are
         used for income tax purposes.

         Income Taxes:
         ------------
         Income taxes are provided for the tax effects of transactions
         reported in the financial statements and consist of taxes currently
         due plus deferred taxes related primarily to differences from
         current recognition of deferred compensation for financial reporting
         purposes and deferred recognition for income tax purposes.  The
         deferred taxes represent the future tax return consequences of those
         differences, which will either be taxable or deductible when the
         assets and liabilities are recovered or settled.

         Recognition of Income:
         ---------------------
         Revenue is recognized for cash-in-advance sales when production of
         the unit is complete.  Revenue is recognized for sales on account
         when the unit is delivered.

         Estimates:
         ---------
         Management uses estimates and assumptions in preparing financial
         statements.  Those estimates and assumptions affect the reported
         amounts of assets and liabilities, the disclosure of contingent
         liabilities and the reported revenues and expenses.

         Earnings Per Share:
         ------------------
         Primary and fully diluted earnings per common share are based on the
         weighted average number of shares of common stock outstanding and
         common stock equivalents of dilutive stock options.  The weighted
         average number of actual shares outstanding was 825,649, 821,649 and
         813,652 for 1996, 1995 and 1994, respectively.

         Reclassification:
         ----------------
         For comparability, the amounts presented for 1995 and 1994 have been
         reclassified, where appropriate, to conform to the presentation used
         for 1996.

Note 2.  Inventories

         The components of inventories are as follows:

                                          1996            1995
                                      -----------     -----------
            Raw materials            $  1,054,192    $    556,194 
            Work-in-process               262,091          46,421 
            Finished goods                765,236         372,584 
            Land and units held 
              for sale                    276,827         393,567 
                                      -----------     -----------           
                                     $  2,358,346    $  1,368,766           
                                      ===========     =========== 
  
         Total general and administrative costs incurred and the portion of
         those costs remaining in inventory are as follows:

                                1996         1995         1994  
                              --------     --------     -------- 
         General and ad-
         ministrative costs:
           Incurred          $ 865,408    $ 740,046    $ 715,350
                              ========     ========     ========
           Remaining in 
            inventory        $  49,853    $  22,432    $  22,251
                              ========     ========     ========
Note 3.  Notes Receivable

         Notes receivable consist of the following:        

                                                    1996        1995  
                                                  --------    --------
        Various mortgage notes receivable,              
        interest ranging from 8% to 10%, 
        payable in various monthly install-
        ments and balloon payments due at 
        various dates through August 1999.  
        Secured by deeds of trust on 
        certain real estate.                    $  169,990  $  134,888

        Credit line deed of trust notes 
        receivable, interest ranging from 
        0% to 10.5%, payable at various 
        dates through 1996.  Secured by
        deeds of trust on certain real estate.     782,329     921,314

        Other Notes                                 14,808      19,325

        Note receivable from the President, pay-
        able in annual principal installments of
        $5,625 plus interest at 5.03%, secured
        by common stock of the Company.             22,500      28,125         
                                                 ---------   ---------
                                                   989,957   1,103,652
                Less current portion               796,721     882,234
                                                 ---------   ---------
                                                $  192,906  $  221,418
                                                 =========   =========
Note 4.  Property and Equipment

         Major classes of property and equipment are as follows:

                                               1996         1995  
                                             ---------     --------
            Land and improvements          $  773,539   $  275,590
            Buildings                       2,940,628    1,076,311
            Manufacturing equipment         1,623,065    1,020,645
            Other furniture, fixtures 
              and equipment                   432,515      349,592
                                            ---------    ---------
                                            5,769,747    2,722,138
           Less accumulated depreciation   $2,085,797   $1,802,732
                                            ---------    ---------
                                            3,683,950      919,406
           Construction in process            209,881    1,326,221
                                            ---------    ---------
                                           $3,893,831   $2,245,627
                                            =========    =========
           Maintenance and repairs expense incurred amounted to
           $173,605, $134,405 and $132,178 for 1996, 1995, and
           1994, respectively.

Note 5.  Post-retirement Benefits

         The Company is obligated under post-retirement benefits
         agreements with two former officers as follows:
           
                                                  1996         1995
                                                ---------   ----------
         Present value of deferred compen-
         sation benefits payable to the widow
         of O.Z. Oliver, former Treasurer and
         Chairman of the Board, at $6,311 per
         month until the earlier of her death
         or Sept. 2006, discounted at 8.50%.    $ 500,797  $  532,477

         Present value of deferred compen-
         sation benefits payable to Robert K.
         Fitts, former President and Chairman
         of the Board, at $5,560 monthly until
         his death after which the benefits
         are payable to his spouse M. K. Fitts
         until the earlier of her death or
         July 2007, discounted at 8.50%.          500,903     523,974

         Present value of estimated 
         post-retirement benefits other than 
         pensions discounted at 8.50%.  
         Details are presented below.              145,486     149,737
                                                 ---------   ---------
                                                 1,147,186   1,206,188
                  Less current portion              66,490      75,366
                                                 ---------   ---------
                                                $1,080,696  $1,130,822
                                                 =========   =========
         The Company is obligated to pay a fixed monthly amount for health
         care coverage to the above payees.  The Company is also obligated
         to pay up to $10,000 annually in premiums for a life insurance 
         policy assigned to the former President.  

         The Company accounts for these obligations in a manner similar to
         that described in Statement of Financial Accounting Standards
         No. 106, "Employer's Accounting for Post-retirement Benefits Other
         than Pensions" under which such costs are recognized as incurred 
         rather than when paid. The statement is not required to be applied
         to benefits payable to selected employees under terms of individual
         contracts.  However, it is management's opinion that adoption of 
         the standard is preferable for financial reporting purposes.
         
Note 6.  Long-Term Debt

         On July 12, 1995, the IDA of Franklin County, VA issued bonds in the
         amount of $3,000,000 to finance the construction of a manufacturing
         facility.  The Series 1995 Variable Rate Demand Industrial Revenue
         Bonds are secured by the Company's Irrevocable Letter of Credit with
         Crestar Bank.  The letter of credit agreement subjects the Company
         to certain financial and operating covenants, all of which the 
         Company was in compliance with at year end.  Crestar Bank holds a
         first lien and security interest on the new facility.  The bonds are
         payable in equal annual principal amounts of $150,000 through 2015.
         The interest rate was 4.1 and 4.95 percent at December 31, 1996 and
         1995, respectively.

         The Company has entered an agreement of sale to purchase the 
         facility from the IDA.  The Company's obligation under the Agreement
         of Sale is equal to the required principal and interest payments on
         the bonds and is payable in monthly installments currently estimated
         at $22,750.  The monthly payments are deposited into a Reimbursement
         Account with Crestar Bank and used to pay all principal, interest
         and fees related to the Bonds.  The Company also agreed to maintain
         an additional required deposit in the reimbursement account equal to
         55 days of interest at 15.0 percent on the bonds.  The Reimbursement
         Account balance was as follows:
                                                 1996         1995
                                                 ----         ----
           Required prepaid interest deposit  $ 67,811    $  67,811
           Unused monthly principal deposits    75,000       75,000
           Earnings                              9,895        2,705
                                              --------     --------
                                              $152,706    $ 145,516
                                              ========     ========

         The Company's policy is to reflect the balance of the reimbursement
         account as an asset until the funds are used by the trustee for
         payment of bond obligations, at which time the Company reduces its
         obligations under the asset sale agreement.

         As of December 31, 1996, $2,939,755 of the bond proceeds have been
         drawn from the trustee.  The Company's obligation under the asset
         sale agreement is reflected at the amount of bond proceeds that have
         been drawn less cumulative payments of $150,000. Any unused proceeds
         will be used for early retirement of bonds.

         Amounts earned on bond proceeds prior to their being drawn from the
         trustee are to be applied to principal reduction in the future.
         These earnings amounted to $105,474 and $58,124 at December 31, 1996
         and 1995, respectively.

         Debt issue costs will be amortized over the term of the debt.
         
         Estimated aggregate maturities of principle on long-term debt
         obligations are $150,000 annually through 2015.

Note 7.  Income Taxes

         The provision for income taxes consists of the following components:

                         1996                       1995          
              --------------------------- -------------------------
              Federal    State   Total   Federal    State   Total 
              --------- -------- -------- -------- -------- -------
Current tax
expense       $ 65,951 $ 24,417 $ 90,368 $194,664 $ 43,652 $238,316
 
Deferred tax 
expense 
(benefit)       16,858    5,242   22,100  (12,973)   3,342 ( 9,631)
               -------  -------- -------  -------- ------- --------         
              $ 82,809 $ 29,659 $112,468 $181,691 $ 46,994 $228,685
              ========  ======= ======== ======== ======== ========

                         1994
             ---------------------------
              Federal    State   Total
             ---------  ------- --------
Current tax
Expense       $156,446 $ 37,926 $194,372
Deferred tax
expense
(benefit)       48,598    3,810   52,408 
             ---------  ------- --------
              $205,044 $ 41,736 $246,780
             ========= ======== ========
         Deferred tax expense (benefit) results from temporary difference in
         the recognition of revenue and expense for tax and financial
         reporting purposes.  The sources of the differences and the tax
         effect of each are as follows:
      
                                      1996       1995      1994   
                                    --------  --------  ---------
     Differing cost basis of 
       property and equipment 
       for tax and financial 
       reporting purposes          $   8,067  $(24,248) $  34,884
                               
     Amounts expensed when
       incurred, deducted when paid:
       Deferred Compensation          21,959    18,285     17,970
       Warranty & accrued vacation  (  4,658) (  1,437)  (  2,114)
       Contributions                ( 11,020)       -          -
       Other, net                      7,752  (  2,231)     1,668
                                    --------   -------   --------
                                   $  22,100  $( 9,631) $  52,408
                                    ========   =======   ========

         Total tax provisions differ from amounts computed by applying the
         statutory Federal income tax rate to income before income taxes
         for the following reasons:

                         1996             1995             1994     
                   ---------------  ---------------  --------------         
                           Percent          Percent          Percent
                             of               of               of
                           Pretax           Pretax           Pretax
                   Amount  Income   Amount  Income   Amount  Income
                  -------- ------  -------- ------  -------- ------
Income tax expense
 at statutory
 federal rate     $ 98,645  34.0%  $206,553  34.0%  $188,695  34.0%
Increase in income
taxes from:
 State income taxes,
 net of federal           
 tax effect         11,605   4.0%    24,300   4.0%    22,199   4.0%
 Other, net          2,218   1.0%   ( 2,168) (0.4%)   35,886   6.5%
                   --------  -----  --------  -----  --------  ----
                  $112,468  39.0%  $228,685  37.6%  $246,780  44.5%
                  ========  =====  ========  =====  ========  =====

Note 8.  Fair Value of Financial Instruments 

         The methods used to estimate the fair value of each material class
         of financial instruments are as follows:

         Cash, Short-term Investments, Trade Receivables and Payables:
         ------------------------------------------------------------
         The carrying amount is a reasonable estimate of the fair value
         because of the short maturity of these instruments.

         Notes Receivable:
         ----------------
         Fair values are estimated by discounting the future cash flows using
         the current rates at which similar loans would be made with similar
         credit ratings and for the same remaining maturities.  At December
         31, 1996 and 1995, carrying values approximate fair values.

         Debt:
         ----
         The interest rate on the long-term debt is reset weekly to reflect
         current market rates.  Consequently, the carrying value of debt
         approximates fair value.

Note 9.  Stock Option Plan

         The Company previously had 150,000 shares of common stock reserved
         for issuance to key employees under an incentive stock option plan,
         which terminated February 24, 1993.  Options were granted at prices
         equal to the fair market value on the dates of grant except for 10
         percent stockholders for which the price was not less than 110
         percent of fair market value.  Options are exercisable in cumulative
         installments over a 5-year period commencing at the date of grant
         and expiring at the end of the fifth year.  The only activity in the
         plan for 1994 through 1996 was the exercise of 12,000 options at
         $3.125 per share in 1995.  All other options granted were previously
         exercised or expired unexercised.

Note 10. Profit Sharing Plan and Trust

         The Company has a contributory profit-sharing plan complying under
         Section 401(k) and certain other provisions of the Internal Revenue
         Code.  The plan covers a majority of all employees meeting minimum
         eligibility requirements.  Participants may elect to have before-tax
         (salary reduction) contributions to be made to the plan on their
         behalf.  The Company matches such before-tax contributions in the
         proportion determined by the Board of Directors at its discretion on
         an annual basis. Additionally, the Company may at the Board's
         discretion make an additional contribution based on the Company's
         pre-tax earnings.  The Company's total contributions to the plan
         were $40,142, $53,010, and $52,401 for 1996, 1995 and 1994,
         respectively.

Note 11. Non-operating Income 

         Non-operating income is composed of the following:

                                  1996        1995        1994    
                                --------    --------    --------
   Interest income             $ 130,119   $ 175,971   $ 159,586
   Interest expense, net of
     earnings on debt proceeds (  64,603)    ( 4,867)    (   445)
   Rental and other income         3,205      22,091      22,250
   Other, net                  (     356)    ( 1,110)     11,454
                                --------    --------    --------
                               $  68,365   $ 192,085   $ 192,845
                                ========    ========    ========

Note 12. Commitments and Contingencies

         Employment Contracts:
         --------------------
         The Company is obligated under employment contracts with the
         President and Vice President.  Combined base annual compensation
         under the contracts is approximately $140,000.  The contracts
         provide for payment of incentive compensation based on certain
         percentages of pretax income of the Company, exclusive of any
         extraordinary items.

         Death Benefit:
         -------------
         The Company is obligated to provide a death benefit to the estate of
         the Vice President in the amount of $35,000. The Company has
         recognized a liability in the amount of $15,480, the estimated
         present value of this obligation discounted at 8.50 percent.  The
         Company is carrying a term life insurance policy in the amount of
         $35,000, the purpose of which is to fund the death benefit.

         Sales and Service Tax Audit:
         ---------------------------
         The Company is undergoing an audit of its West Virginia sales and
         service tax returns.  The West Virginia Department of Revenue has
         assessed the Company an additional tax of $117,999 and related
         interest.  The Company's attorneys have filed a Petition for
         Reassessment with the State.  In the opinion of the Company's legal
         counsel, the Company's chances of success on the current
         assessments are favorable.

Note 13. Related Party Transactions

         In the normal course of business, the Company makes purchases from
         a supplier owned by a director of the Company.  Purchases from this
         supplier totaled $662,539, $462,654 and $484,701 for 1996, 1995 and
         1994, respectively.

         The Company has notes receivable from various shareholders (Note 3)
         and is obligated under deferred compensation agreements to two 
         former employees (Note 5).

Item 8.   Changes In and Disagreements With Accountants on Accounting
          and Financial Disclosure.
          -----------------------------------------------------------
     None

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

          The Company's Board of Directors is composed of the following six
          members.

                 Name                    Age        Director Since
                ------                  -----      ----------------
       Edwin J. Campbell  . . . . . . . . 67             1978
       Dale H. Powell   . . . . . . . . . 63             1980
       W. Curtis Carter   . . . . . . . . 78             1991
       J. Dillard Powell  . . . . . . . . 63             1991
       Bobbie L. Oliver . . . . . . . . . 64             1994
       Mary L. Fitts  . . . . . . . . . . 57             1994


    EDWIN J. CAMPBELL was Vice President of Sales and Marketing of the
Company from 1977 until 1990, and has been Corporate Secretary since March,
1990.  He has been Vice President since October, 1990.

    DALE H. POWELL was Vice President-Operations of the Company from 1980 to
March 1990, when he became President and Chairman of the Board.  Mr. Powell
was Secretary of the Company from March 1988 until March 1990.  Mr Powell is
the brother of J. Dillard Powell.

    W. CURTIS CARTER, presently retired, was an Officer and Director of
Stuart Lumber Corporation in Stuart, Virginia for 24 years until the company
was sold to the Masonite Corporation in 1977.  He remained with Masonite in
accounting and other capacities until his retirement in 1988.

    J. DILLARD POWELL has been owner and President of Rocky Mount Supply
Company since 1989.  Prior thereto he served as President of Continental
Homes from 1973 to 1988 where he had worked in other capacities since 1960. 
He was on the State Board of Housing from 1972 to 1986 serving 8 years as
Chairman; was a Commissioner for the Virginia Housing Development Authority
from 1976 to 1984; Chairman of the National Joint Council of States on
Building Codes and Standards from 1986 to 1988; and has been a Director of
First Virginia Bank-Franklin County since 1983.  He is the brother of Dale H.
Powell.

     BOBBIE L. OLIVER is the wife of the late O. Z. Oliver, Co-founder and
former Board Chairman of Mod-U-Kraf Homes, Inc.  She is the largest
shareholder of the Company and is managing real estate and rental properties
in Southwest Virginia.  She is the Sister-In-Law of Dale H. Powell and the
Sister of Mary L. Fitts.

     MARY L. FITTS, Real Estate Investor, has been owner and operator of an
apartment complex since 1983.  She is the wife of Robert K. Fitts, co-founder
of the Company.  She is the Sister-In-Law of Dale H. Powell and the Sister of
Bobbie L. Oliver.

                   SECTION 16(A) BENEFICIAL OWNERSHIP
                           REPORTING COMPLIANCE

     The Company's directors, executive officers and owners of more than 10%
Company's shares are required under the Securities Exchange Act of 1934 to
file report of ownership and changes in ownership with the Securities
Exchange Commission.  Copies of these reports must also be furnished to the
Company.  Based solely on review of the copies of such reports furnished to
the Company through the date hereof, or written representations that no
reports were required; the Company believes that during 1996, all filing
requirements applicable to its officers, directors and 10% shareholders were
met.

Item 10.   Executive Compensation.
           ----------------------

    The following table presents information relating to total compensation
of the Chief Executive Officer of the Company during the periods indicated.

                        SUMMARY COMPENSATION TABLE

               Annual Compensation                   
                                                           All
     Name and                        (1)                  Other (2)
Principal Position    Year       Salary       Bonus    Compensation
         
Dale H. Powell        1996      $75,000      $20,322      $15,278
 President and 
Chairman of the       1995      $75,000      $18,542      $16,221 
Board
                      1994      $75,000      $11,507      $15,956 

(1)  Bonus is calculated on the prior years' earnings in accordance with
     Mr. Powell's employment agreement.

(2)  Consists of $13,207 of premiums paid by the Company on a "split-dollar"
     insurance policy for 1995, 1994 and 1993, and $2,071, $3,014 and $2,749
     of Company contributions to Mr. Powell's profit-sharing plan account for
     1996, 1995 and 1994 respectively.  

Employment Agreement

    Under an Employment Agreement with the Company, effective January 1,
1991, Dale H. Powell will be paid an annual base salary of $75,000, subject
to annual review by the Board of Directors.  In addition to the base salary,
Mr. Powell will be paid incentive compensation equal to 3% of the income of
the Company before federal and state income taxes, and before the payment of
any dividends or extraordinary non-recurring items or expenses.

Compensation of Directors

    Outside directors are paid a fee of $250.00 for each meeting of the Board
of Directors attended.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.
          ---------------------------------------------------------------
                    
    The Company's only authorized equity is common stock, $1 par value
("Common Stock"), each share of which has one vote on all matters.  There
were outstanding and entitled to vote 825,649 shares of Common Stock on the
Record Date.

    The following table presents certain information as of the Record Date
regarding beneficial ownership of Common Stock by the directors and nominees
for directors, officers and directors as a group, and all owners of more than
5% of the Common Stock.

                               Amount and Nature
     Name of Beneficial         of Beneficial             Percent
         Owner                    Ownership                Owned
    ------------------        ---------------------       -------
    Edwin J. Campbell               42,092(1)               5.10%
    Dale H. Powell                  68,800                  8.33
    W. Curtis Carter                36,720                  4.45
    J. Dillard Powell                3,793                   .46
    Bobbie L. Oliver               173,406                 21.00
    Mary L. Fitts                   66,000(2)               7.99
    All officers and directors
      as a group(8 persons)        391,111                 47.37

    Robert K. Fitts                 78,547(3)               9.51
      P. O. Box 82        Boones Mill, VA  24065

    (1)   Includes shares held in various fiduciary capacities and owned by
          or with certain relatives.

    (2)   Includes 66,000 shares with respect to which voting and investment
          power is shared with Robert K. Fitts

    (3)   Includes 12,547 shares with respect to which Mr. Fitts has sole
          voting and investment power and 66,000 shares with respect to which
          such power is shared with Mary L. Fitts.     


Item 12.  Certain Relationships and Related Transactions.
          -----------------------------------------------
 
    Pursuant to a settlement agreement between the Company and the Estate of
O. Z. Oliver, deferred compensation benefits of $75,726 were paid to Mr.
Oliver's widow, Bobbie L. Oliver, during 1996.  In addition, $3,010 was paid
in 1996 to Mrs. Oliver for health insurance premiums.  Mrs. Oliver, a
director, is a Sister In Law to Dale H. Powell, President and Chairman of the
Board of the Company and a Sister to Mary L. Fitts.

   Pursuant to a settlement agreement between the Company and Robert K.
Fitts, deferred compensation benefits of $66,724 and a sum of $10,000 in
premiums for life insurance policies assigned to Mr. Fitts were paid to Mr.
Fitts in 1996.  In addition, $6,150 was be paid in 1996 to Mr. Fitts for
health insurance premiums for Mr. Fitts and Mary L. Fitts, his spouse.  Mr.
Fitts' spouse, Mary L. Fitts, a director, is a Sister of Bobbie L. Oliver and
a Sister-In-Law to Dale H. Powell, President and Chairman of the Board of the
Company.

     In the normal course of business, the Company makes purchases from a
supplier owned by a director of the Company, J. Dillard Powell.  The supplier
was acquired by Mr. Powell in 1989.  Prior to that time, the supplier had
been a long time vendor of the Company.  Purchases from this supplier totaled
$662,539 for 1996.

Item 13.  Exhibits, Lists And Reports on Form 8-K.
(a)  The following documents are filed as part of this report:

(3)  Exhibits:
     3.1(a)    Articles of Incorporation (filed as an exhibit to Registrant's
               Form 10-K for the fiscal year ended December 31, 1983 and
               incorporated herein by reference)

     3.1(b)    Amendment to Articles of Incorporation dated November 2, 1989
               (filed as an exhibit to Registrant's Form 10-K for the fiscal
               year ended December 31, 1989 and incorporated herein by
               reference)

     3.2(a)    By-Laws (filed as an exhibit to the Registrant's Form 10-K for
               the fiscal year ended December 31, 1990 and incorporated
               herein by reference)

     3.2(b)    Amendment to By-Laws dated January 19, 1994 (filed as an
               exhibit to the Registrant's Form 10-KSB for the fiscal year
               ended December 31, 1993 and incorporated herein by reference)

     3.2(c)    Amendment to By-Laws dated February 8, 1995

     10.1      1983 Mod-U-Kraf Homes, Inc. Incentive Stock Option Plan (filed
               as an exhibit to Registrant's Form 10-K for the fiscal year
               ended December 31, 1983 and incorporated herein by reference)

     10.3(a)   Settlement Agreement, dated as of March 24, 1990, between
               Registrant and Robert K. Fitts (filed as an exhibit to
               Registrant's Form 10-K for the fiscal year ended Dec. 31, 1989
               and incorporated herein by reference)

     10.3(b)   Settlement Agreement, dated as of September 13, 1990, between
               Registrant and the Estate of O.Z. Oliver (filed as an exhibit
               to Registrant's Form 8-K filed Sept. 15, 1990 and incorporated
               herein by reference)

     10.4(a)   Employment Agreement, dated November 21, 1990, between
               Registrant and Dale H. Powell (filed as an exhibit to
               Registrant's Form 10-K for the fiscal year ended Dec.31, 1990
               and incorporated herein by reference)

     10.4(b)   Employment Agreement, dated November 21, 1990, between
               Registrant and Edwin J. Campbell (filed as an exhibit to
               Registrant's Form 10-K for the fiscal year ended Dec. 31, 1990
               and incorporated herein by reference)

     21        Subsidiaries

(b)  Reports on Form 8-K   -   None.

<PAGE>                       SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                              MOD-U-KRAF HOMES, INC.             
                              (Registrant)

March 26, 1997                By s/Dale H. Powell
                              -------------------------
                              Dale H. Powell, President and
                                 Chairman of the Board

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

March 26, 1997                s/Dale H. Powell                    
                              -------------------------
                              Dale H. Powell, President and                 
                                    Chairman of the Board (Principal        
                                         Executive officer)

March 26, 1997                s/Edwin J. Campbell
                              -------------------------
                              Edwin J. Campbell, Vice President,            
                                    Corporate Secretary and Director

March 26, 1997                s/Jeffrey L. Boudreaux
                              -------------------------
                              Jeffrey L. Boudreaux, Controller              
                                    (Principal Financial and Accounting     
                                         Officer)

March 26, 1997                s/W. Curtis Carter
                              -------------------------
                              W. Curtis Carter, Director

March 26, 1997                s/J. Dillard Powell
                              -------------------------
                              J. Dillard Powell, Director

March 26, 1997                s/Bobbie L. Oliver
                              -------------------------
                              Bobbie L. Oliver, Director

March 26, 1997                s/Mary L. Fitts
                              -------------------------
                              Mary L. Fitts, Director