FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


(Mark One)

[ X ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 1999

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________

Commission file number: 0-21249

                          GRAND COURT LIFESTYLES, INC.
             (Exact name of registrant as specified in its charter)

              Delaware                                        22-3423087
  (State or other jurisdiction of                          (I.R.S. Employer
   incorporation or organization)                         Identification No.)


2650 North Military Trail, Suite 350, Boca Raton, Florida         33431
(Address of principal executive offices)                       (Zip code)

Registrant's telephone number, including area code  (561) 997-0323

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that 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
                                             ----    ----.

     At September 7, 1999, the Company had 17,545,600 shares of Common Stock,
$.01 par value, outstanding.





<PAGE>

                          GRAND COURT LIFESTYLES, INC.
                     INDEX TO QUARTERLY REPORT ON FORM 10-Q
                   FOR THE FISCAL QUARTER ENDED JULY 31, 1999

                                                                            PAGE

PART I - FINANCIAL INFORMATION

Item 1: Financial Statements and Supplementary Data..........................  2

        Consolidated Balance Sheets as of January 31, 1999 and July 31, 1999.  2

        Consolidated Statements of Operations for the three and six months
        ended July 31, 1998 and 1999.........................................  3

        Consolidated Statements of Cash Flows for the six months
        ended July 31, 1998 and 1999.........................................  4

        Notes to Consolidated Financial Statements...........................  5

Item 2: Management's Discussion and Analysis of Financial Condition and
        Results of Operations................................................ 12

Item 3: Quantitative and Qualitative Disclosures about Market Risk........... 33

PART II - OTHER INFORMATION

Item 2: Changes in Securities and Use of Proceeds............................ 34

Item 5: Other................................................................ 34

Item 6: Exhibits and Reports on Form 8-K..................................... 35


                                      1

<PAGE>



                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

GRAND COURT LIFESTYLES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------


<TABLE>

<CAPTION>
<S>                                                                                         <C>                 <C>
                                                                                                          July 31,
                                                                                    January 31,         (unaudited)
                                                                                ----------------      ----------------
                                                                                        1999                  1999
                                                                                ----------------      ----------------
ASSETS

     Cash and cash equivalents..............................................      $ 22,784,000           $  8,372,000

     Notes and receivables - net............................................       227,104,000            238,598,000

     Investments in affiliated entities.....................................         4,945,000             11,533,000

     Construction-in-progress...............................................        11,617,000             15,712,000

     Property, buildings and equipment - net................................        35,294,000             13,308,000

     Other assets - net.....................................................        17,570,000             20,130,000
                                                                                  ------------           ------------

           Total assets.....................................................      $319,314,000           $307,653,000
                                                                                  ============           ============


LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

     Loans and accrued interest payable.....................................      $169,781,000           $177,742,000

     Construction and mortgage loans payable................................        35,286,000             12,917,000

     Notes and commissions payable..........................................         4,158,000              2,910,000

     Other liabilities......................................................         5,767,000              6,269,000

     Deferred income........................................................        68,596,000             68,173,000
                                                                                  ------------           ------------

          Total liabilities.................................................       283,588,000            268,011,000
                                                                                  ------------           ------------

Commitments and contingencies...............................................

Minority interest...........................................................                --              1,070,000

Stockholders' equity........................................................

     Preferred Stock, $.001 par value - authorized, 15,000,000 shares;
     none issued and outstanding............................................                --                     --

     Common Stock, $.01 par value - shares authorized
     40,000,000 ; shares issued 17,800,000 .................................           178,000                178,000

     Paid-in capital........................................................        73,451,000             74,335,000

     Treasury stock - 200,000 shares at cost                                                --             (1,143,000)

     Accumulated deficit....................................................       (37,903,000)           (34,798,000)
                                                                                  ------------           ------------

          Total stockholders' equity........................................        35,726,000             38,572,000
                                                                                  ------------           ------------

               Total liabilities and stockholders' equity...................      $319,314,000           $307,653,000
                                                                                  ============           ============

See Notes to Consolidated Financial Statements.


</TABLE>
                                          2

<PAGE>



GRAND COURT LIFESTYLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>


<S>                                                                 <C>                               <C>
                                                           Three months ended                Six months ended
                                                                July 31,                         July 31,
                                                              (unaudited)                       (unaudited)
                                                    ------------------------------   ------------------------------
                                                         1998            1999              1998             1999
                                                    -------------  ---------------   --------------   --------------
Revenues:
   Sales..........................................  $  7,481,000    $ 18,638,000     $ 17,961,000      $ 36,853,000
   Syndication fee income.........................     1,912,000       1,624,000        4,087,000         3,478,000
   Deferred income earned.........................       207,000         156,000          415,000           311,000
   Interest income................................     3,598,000       1,826,000        7,487,000         4,652,000
   Property management fees from related
     parties......................................       724,000         841,000        1,712,000         1,924,000
   Equity in earnings (losses) in affiliated
     entities.....................................       164,000         (34,000)         322,000           137,000
   Senior living revenues.........................     1,171,000       1,330,000        1,589,000         3,892,000


   Other income...................................       665,000              --        1,350,000                --
                                                    ------------    ------------     ------------      ------------
                                                      15,922,000      24,381,000       34,923,000        51,247,000
                                                    ------------    ------------     ------------      ------------
Cost and Expenses:
   Cost of sales..................................    10,210,000       9,044,000       18,576,000        19,188,000
   Selling........................................     1,522,000       1,298,000        3,632,000         2,854,000
   Interest.......................................     5,280,000       5,029,000       10,750,000        10,740,000
   General and administrative.....................     2,650,000       3,176,000        5,174,000         6,167,000
   Loss on impairment of notes and
   receivables....................................            --         713,000               --           713,000
   Senior living operating expenses...............     1,219,000       2,152,000        2,165,000         5,095,000
   Officers' compensation.........................       300,000         300,000          600,000           600,000

   Depreciation and amortization..................     1,301,000       1,172,000        2,388,000         2,785,000
                                                    ------------    ------------     ------------      ------------
                                                      22,482,000      22,884,000       43,285,000        48,142,000
                                                    ------------    ------------     ------------      ------------
Net (loss) income.................................  $ (6,560,000)   $  1,497,000     $ (8,362,000)     $  3,105,000
                                                    ============    ============     ============      ============

(Loss) income per common share (basic and
     diluted).....................................  $       (.37)   $        .08    $        (.49)     $        .18
                                                    ============    ============    =============      ============

Weighted average common shares....................    17,800,000      17,674,000       17,104,000       17,733,000
                                                    ============    ============    =============      ============

</TABLE>

See Notes to Consolidated Financial Statements.


                                        3

<PAGE>


GRAND COURT LIFESTYLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                                Six months ended July 31, (unaudited)
                                                                            ---------------------------------------
<S>                                                                                 <C>                    <C>
                                                                                    1998                   1999
                                                                            ------------------     -----------------
Cash flows used from operating activities:


   Net (loss) income....................................................     $  (8,362,000)           $  3,105,000
                                                                             -------------            ------------
Adjustments to reconcile net (loss) income to net cash used by
operating activities:
   Loss on impairment of notes and receivables..........................                --                 713,000
   Depreciation and amortization........................................         2,388,000               2,785,000
   Deferred income earned...............................................          (415,000)               (311,000)
Changes in operating assets and liabilities:
   Accrued interest on notes and receivables ...........................         4,695,000               8,163,000
   Notes and receivables................................................       (12,272,000)            (19,486,000)
   Commissions payable..................................................            49,000                 456,000
   Other liabilities....................................................         3,627,000                 502,000
   Minority interest....................................................                --               1,070,000
   Deferred income......................................................         3,521,000                (112,000)
                                                                             -------------            ------------
                                                                                 1,593,000              (6,220,000)
                                                                             -------------            ------------
   Net cash used by operating activities................................        (6,769,000)             (3,115,000)
Cash flows used from investing activities:
   Increase in investments..............................................          (535,000)               (565,000)
   Cost of investment sold..............................................                --               5,365,000
   Building, furniture and equipment....................................        (7,725,000)             (9,274,000)
   Construction in progress.............................................        (4,706,000)            (10,579,000)
                                                                             -------------            ------------
   Net cash used by investing activities................................       (12,966,000)            (15,053,000)
                                                                             -------------            ------------
Cash flows provided by financing activities:
   Payments on loans payable............................................       (11,712,000)            (24,780,000)
   Proceeds from loans payable .........................................        17,973,000              32,741,000
   Proceeds from construction and mortgage loans payable................         6,373,000              12,917,000
   Payments on construction and mortgage loans payable..................                --              (9,250,000)
   Decrease (increase) in other assets..................................           522,000              (5,025,000)
   Payments of notes payable............................................          (161,000)             (1,704,000)
   Purchase of treasury stock...........................................                --              (1,143,000)
   Net proceeds from initial public offering ...........................        22,292,000                      --
                                                                             -------------            ------------
   Net cash provided by financing activities............................        35,287,000               3,756,000
                                                                             -------------            ------------
   (Decrease) increase in cash and cash equivalents.....................        15,552,000             (14,412,000)

   Cash and cash equivalents, beginning of period.......................        11,964,000              22,784,000
                                                                             -------------            ------------
   Cash and cash equivalents, end of period...........................       $  27,516,000            $  8,372,000
Supplemental information:

   Interest paid........................................................     $  10,508,000            $ 10,720,000
                                                                             =============            ============

   Non-cash capital contribution........................................     $          --            $    883,000
                                                                             =============            ============

</TABLE>

See Notes to Consolidated Financial Statements.

                                        4

<PAGE>




GRAND COURT LIFESTYLES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JULY 31, 1998 AND 1999
--------------------------------------------------------------------------------



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

     The  accompanying   consolidated   financial   statements  of  Grand  Court
Lifestyles,  Inc. and its  wholly-owned  subsidiaries  (the "Company") have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Rule 10-01 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  The consolidated  financial statements as of and for the periods
ended July 31, 1998 and 1999 are  unaudited.  The results of operations  for the
interim periods are not necessarily  indicative of the results of operations for
the fiscal year.  Certain amounts in the prior period have been  reclassified to
conform with current year presentation.  These consolidated financial statements
should be read in connection  with the financial  statements  and notes included
thereto in the  Company's  Annual  Report on Form 10-K for the fiscal year ended
January 31, 1999.  Capitalized  terms used but not defined herein shall have the
same meanings as set forth in the  Company's  annual report on Form 10-K for the
fiscal year ended  January 31, 1999.  The Company has no items of  comprehensive
income.

     Unless the  context  otherwise  requires,  (i) all  references  herein to a
"Fiscal" year refer to the fiscal year beginning on February 1 of that year (for
example,  "Fiscal 1998" refers to the fiscal year beginning on February 1, 1998)
and (ii) all references to the Company,  include the Company,  its  subsidiaries
and its predecessors taken as a whole.


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVESTMENTS--Historically,   the  Company  retained  a  1%  general  partnership
interest in the Owning Partnership and a 1% general partnership  interest in the
Investing  Partnership of the  Syndicated  senior living  communities and
accounted for such interests under the equity method of accounting. Under this
method, the Company records its share of income and loss of the entity as well
as any  distributions  or contributions as an increase or decrease to its
investment account. In recent  Syndications,  the Company has been retaining a
50% partnership  interest in the Syndicated  senior living communities. Due to
this increased percentage in ownership being retained by the Company,  the
Company  consolidates  these Owning  Partnerships  into its consolidated
financial statements.

                                      5
<PAGE>


2.   NEWLY DEVELOPED COMMUNITIES

     The Company has completed  construction of eight senior living  communities
     (each a  "Development  Community").  Each  Development  Community is in its
     initial  lease-up  phase.  Four  of  these  Development   Communities  were
     developed as part of its development  financing  arrangement  with Capstone
     Capital  Corporation  ("Capstone")  and are leased to and  operated  by the
     Company.  These four  communities  contain a total of 550  apartment  units
     offering both independent and assisted living services.  The four remaining
     completed  Development  Communities  contain a total of 536 apartment units
     offering both independent and assisted living services.

     In  April  1999,  the  Company  entered  into  joint  venture  arrangements
     regarding four completed Development Communities, two of such joint venture
     arrangements  being  effective  as of April 1, 1999 and the other two being
     effective as of May 1, 1999.  Pursuant to each joint  venture  arrangement,
     the Company sold a 50% interest in the  Development  Communities  to George
     Batchelor.  The Company  realized a profit from each of the sales and earns
     management fees for managing each of the communities. Mr. Batchelor has the
     right to  terminate  the  Company's  management  upon thirty  days  written
     notice.  Mr.  Batchelor  receives  a  cumulative  priority  return  on  its
     investment  from all cash flow  generated by the  community  and any excess
     cash  flow is  shared  50% by the  Company  and 50% by Mr.  Batchelor.  The
     Development  Communities that are subject to joint venture arrangements are
     not  consolidated  into the Company's  consolidated  financial  statements.
     Instead,  the  Company  recognizes  its  investment  in  these  Development
     Communities under the equity basis of accounting.

     In addition,  the Company has commenced  construction  on three  additional
     Development Communities.


3.   CAPITALIZATION

     In March  1998,  in an initial  public  offering of its common  stock,  the
     Company sold  2,800,000  shares of its common stock at a price of $9.50 per
     share. The net proceeds,  after deducting for all offering  expenses,  that
     the Company  received as a result of this  offering  was  $22,300,000.  The
     Company  intends to use  approximately  $19,300,000  of the net proceeds to
     finance the development of new senior living  communities and the remaining
     $3,000,000 for working capital.  As of July 31, 1999,  $11,500,000 has been
     used to finance  the  development  of new  senior  living  communities  and
     $3,000,000  has been used for  working  capital.  The  Company  purchased a
     series  of  treasury   bills  with  the  remaining  net  proceeds   pending
     application of such funds to the intended uses.

     In March 1999, the Board of Directors authorized the Company to purchase up
     to 300,000 shares of the Company's common stock at prevailing  rates. As of
     July 31, 1999, the Company purchased 200,000 of such shares.


                                         6
<PAGE>

4.   COMMITMENTS AND CONTINGENCIES

     The Company rents office space under a lease expiring February 2000. Annual
     rent under such lease is approximately $206,000. The Company entered into a
     ten year lease for additional office space,  commencing  September 1, 1991.
     The annual rent is approximately $330,000.

     The  Company's  revenues  have been,  and are  expected  to continue to be,
     primarily derived from the sales of partnership interests  ("Syndications")
     of partnerships it organizes to acquire existing senior living  communities
     (each,  an "Owning  Partnership").  In a typical  Syndication,  the Company
     identifies a senior living community  suitable for acquisition and forms an
     Owning  Partnership  (in  which  it is the  managing  general  partner  and
     initially owns all of the  partnership  interests) to acquire the property.
     Another partnership (the "Investing  Partnership") is also formed (in which
     the Company is also the general  partner  with a 1%  interest)  to purchase
     from the Company a 99% partnership  interest in the Owning Partnership (the
     "Purchased Interest"), leaving the Company with a 1% interest in the Owning
     Partnership  and a 1% interest in the  Investing  Partnership.  The Company
     accounts for these general partnership interests using the equity method of
     accounting.  The purchase price for the Purchased  Interest is paid in part
     in cash and in part by a note from the Investing Partnership with a term of
     approximately  five years ( a "Purchase  Note").  Limited partners purchase
     partnership  interests  in the  Investing  Partnership  by agreeing to make
     capital  contributions to the Investing Partnership over approximately five
     years. These capital  contributions enable the Investing Partnership to pay
     the purchase price for the Purchased Interest, including the Purchase Note.
     The limited  partners are  entitled to receive,  for a period not to exceed
     five years,  distributions  equal to between 11% and 12% per annum of their
     then paid-in scheduled capital  contributions.  Although the Company incurs
     certain  costs in connection  with  acquiring a community and arranging for
     the Syndication of partnership interests, the Company makes a profit on the
     sale of the Purchased Interest.  In addition, as part of the purchase price
     for the Purchased Interest paid by the Investing  Partnership,  the Company
     receives a 40%  interest in sale and  refinancing  proceeds  after  certain
     priority  payments to the limited  partners.  In recent  Syndications,  the
     Company  has  been  selling  50%   partnership   interests  in  the  Owning
     Partnerships.  Based upon this  change,  the Company  receives a 50% rather
     than a 40% interest in sale and refinancing proceeds after certain priority
     payments  to the limited  partners.  The  Company  anticipates  that future
     Syndications  will  involve  the  sale  of  50%  interests  in  the  Owning
     Partnerships.  Due to this increased percentage in ownership being retained
     by the Company, the Company consolidates these Owning Partnerships into its
     consolidated   financial  statements.   The  Company  also  enters  into  a
     management  contract  with the  Owning  Partnership  pursuant  to which the
     Company  agrees to  manage  the  senior  living  community.  As part of the
     management fee arrangements,  the management contract requires the Company,
     for a period not to exceed five years, to pay to the Owning Partnership (to
     the extent that cash flows  generated  by the  property  are  insufficient)
     amounts  sufficient to fund (i) any  operating  cash  deficiencies  of such
     Owning  Partnership  and (ii) any part of such 11% to 12%  return  not paid
     from cash flow from the related  property  (collectively,  the  "Management
     Contract Obligations"). The Company, therefore, has no direct obligation to
     pay specified returns to limited partners. Rather, the Company is obligated

                                        7

<PAGE>

     pursuant  to the  management  contract  to pay  to the  Owning  Partnership
     amounts  sufficient to make the specified  returns to the limited partners,
     to the extent the cash flows generated by the property are  insufficient to
     do so.  The  Owning  Partnership  then  distributes  these  amounts  to the
     Investing  Partnership  which,  in turn,  distributes  these amounts to the
     limited partners. As a result of the Management Contract  Obligations,  the
     Company  bears the  risks of  operations  and  financial  viability  of the
     related  property  for such  five-year  period.  The  management  contract,
     however,  rewards the Company for successful  management of the property by
     allowing  the Company to retain any cash flow  generated by the property in
     excess of the amount needed to satisfy the Management Contract  Obligations
     as an incentive  management fee. After the initial  five-year  period,  the
     limited  partners are entitled to the same  specified  rate of return,  but
     only to the extent there is sufficient cash flow from the property, and any
     amounts of cash flow  available  after payment of the  specified  return to
     limited partners are shared as follows:  40% to the Company as an incentive
     management fee and 60% for distribution to the limited partners.  In recent
     Syndications,  any  amounts  of cash flow  available  after  payment of the
     specified  return to limited partners are shared 50% to the Company and 50%
     to the limited partners.  The management  contract is not terminable during
     this initial five-year period and is terminable  thereafter by either party
     upon  thirty  to sixty  days  notice.  The  Company  has  arranged  for the
     acquisition of the Syndicated senior living  communities that it manages by
     utilizing mortgage financing and by arranging for Syndications of Investing
     Partnerships  formed to acquire  interests in the Owning  Partnerships that
     own the senior living communities. The Syndicated senior living communities
     managed by the Company are owned by the respective Owning  Partnerships and
     not by the Company.  The Company is the managing general partner of all but
     one of the  Owning  Partnerships  and  manages  all  of the  senior  living
     communities in its portfolio. The Company is the general partner of most of
     the senior living  Investing  Partnerships.  The mortgage  financing of the
     Syndicated Communities and Syndicated Multi-Family Properties are generally
     without recourse to the general credit or assets of the Company except with
     respect to certain specified  obligations,  including,  for example,  costs
     incurred for the correction of hazardous environmental conditions. However,
     except  for  such  non-recourse  obligations,  as a  general  partner,  the
     Company,  or a wholly-owned entity formed solely to be the general partner,
     is fully liable for all partnership obligations,  including those presently
     unknown or unobserved, and unknown or future environmental liabilities. The
     cost of any such obligations or claims, if partially or wholly borne by the
     Company,  could adversely affect the Company's business,  operating results
     and  financial   condition.   Although  most  of  the  mortgage  loans  are
     non-recourse,   (i)  the  Company  is  liable  as  a  general  partner  for
     approximately  $12,667,000 in principal amount of mortgage debt relating to
     six Syndicated Communities and (ii) wholly-owned entities (whose only asset
     is a specific general partnership  interest) are liable as general partners
     for approximately $44,745,000 in principal amount of mortgage debt relating
     to eleven  Syndicated  Communities  managed  by the  Company as of July 31,
     1999. In the case of the general  partner  liabilities of the  wholly-owned
     entities (whose only asset is a specific general partnership interest), the
     only  assets of the  Company  at risk of loss are the  general  partnership
     interests in the  wholly-owned  entities.  The Company fully guarantees the
     mortgage  debt  relating to four  Syndicated  Communities  in the amount of
     $13,400,000.

                                         8

<PAGE>

     In addition,  six of the  Syndications  have involved the  construction  of
     additional  apartment  units and/or  common  space at the  existing  senior
     living  communities.  The Owning  Partnerships hire independent third party
     contractors  to do the  construction  pursuant to guaranteed  maximum price
     contracts.  The  new  construction  generates  additional  risks,  such  as
     increased  costs due to change orders,  which the Company  believes are not
     material.

     As part of the  Company's  development  program,  on September 18, 1996 the
     Company entered into a master development  agreement with Capstone pursuant
     to which Capstone funded 100% of the development  cost of four  Development
     Communities.  The  Capstone  arrangement  provides  that the  Company  will
     operate these four Development  Communities pursuant to long-term operating
     leases with Capstone, which leases were entered into upon the completion of
     construction and the satisfaction of certain other conditions.  The initial
     term of each  lease is 15  years  with  five-year  extension  options.  The
     cumulative  annual rent which the Company is  obligated  to pay to Capstone
     for the four Development Communities placed in service is $3,792,000.

     The Company has  guaranteed  the mortgages on the  Development  Communities
     subject to joint venture arrangements and such guarantees remain in effect.

     The  Company is  involved  in legal  proceedings  which have  arisen in the
     ordinary  course of  business.  The Company  intends to  vigorously  defend
     itself in these  matters  and does not  believe  that the  outcome of these
     matters will have a material effect on its financial statements.

5.   NEW ACCOUNTING PRONOUNCEMENTS

     In June of 1998, the Financial  Accounting  Standards Board ("FASB") issued
     Statement  No. 133,  "Accounting  for  Derivative  Instruments  and Hedging
     Activities." This statement established  accounting and reporting standards
     for  derivative  instruments,   including  certain  derivative  instruments
     embedded in other contracts,  and for hedging  activities.  It is effective
     for all fiscal  quarters of fiscal years beginning after June 15, 2000. The
     Company's  use of derivative  instruments  has consisted of a treasury bill
     lock related to two  specific  debt  financings.  While the Company has not
     completed  its  analysis of  Statement  No. 133 and has not made a decision
     regarding  the timing of adoption,  it does not believe that  adoption will
     have a material effect on its financial  position and results of operations
     based on its current use of derivative instruments.

6.   SEGMENT REPORTING

     The Company views its business in the following three segments:

     1.   Syndication - Revenues are comprised of sales, syndication fee income,
          property management fees, interest income,  deferred income earned and
          equity  in  earnings  from  partnerships  relating  to the  Syndicated
          Communities.


                                        9

<PAGE>

     2.   Multi-Family   -  Revenues  are  comprised  of  interest   income  and
          recognition   of   deferred   income  from   Syndicated   Multi-Family
          properties,  which  income  is  being  recognized  on the  installment
          method.

     3.   New  Development  - Revenues  are derived  from senior  living  rental
          revenues from the Development  Communities and from sales,  management
          fees and equity in  earnings  (losses)  from  Development  Communities
          subject to joint venture arrangements.



                                      10

<PAGE>


                     Three months ended             Six months ended
                          July 31,                      July 31,
                 -----------------------------------------------------------
                    1998           1999             1998           1999
                 -----------------------------------------------------------

REVENUES

Syndication (a)  $10,281,000    $11,373,000     $24,082,000    $22,696,000

Multi-family (b)     207,000        156,000         415,000        311,000

New
Development (a)    1,836,000     11,026,000       2,939,000     23,588,000
                 -----------    -----------     -----------    -----------
Combined
Segments        $ 12,324,000   $ 22,555,000    $ 27,436,000   $ 46,595,000
                ============   ============    ============   ============

INTEREST INCOME

Syndication     $    827,000   $    807,000    $  2,515,000   $  2,173,000

Multi-family       2,723,000        942,000       4,465,000      2,349,000

New
Development           48,000         77,000         507,000        130,000
                ------------   ------------    ------------   ------------

Combined
Segments        $  3,598,000   $  1,826,000    $  7,487,000   $  4,652,000
                ============   ============    ============   ============

OPERATING PROFIT (LOSS) (c)

Syndication     $ (3,646,000)  $  2,588,000    $ (2,028,000)  $  3,969,000

Multi-family      (2,359,000)    (4,960,000)     (5,385,000)    (8,552,000)

New
Development         (555,000)     3,869,000        (949,000)     7,688,000

Combined
Segments        $ (6,560,000)  $  1,497,000    $ (8,362,000)  $  3,105,000
                ============   ============    ============   ============

GROSS ASSETS

Syndication     $ 26,938,000   $ 33,758,000    $ 26,938,000   $ 33,758,000

Multi-family     238,297,000    233,240,000     238,297,000    233,240,000

New
Development       63,749,000     40,655,000      63,749,000     40,655,000

Combined
Segments        $328,984,000   $307,653,000    $328,984,000   $307,653,000
                ============   ============    ============   ============

                        Three months ended         Six months ended
                             July 31,                  July 31,
                 ---------------------------------------------------------
                      1998         1999             1998          1999
                 ---------------------------------------------------------


INTEREST EXPENSE

Syndication      $   948,000    $   943,000     $ 2,231,000    $ 1,839,000

Multi-family       3,712,000      4,053,000       7,284,000      7,870,000

New
Development          620,000         33,000       1,235,000      1,031,000
                 -----------    -----------     -----------    -----------
Combined
Segments         $ 5,029,000    $ 5,029,000     $10,740,000    $10,740,000
                 ===========    ===========     ===========    ===========


DEPRECIATION AND AMORTIZATION

Syndication      $    87,000    $   109,000     $   207,000    $   282,000

Multi-family         952,000        974,000       1,756,000      2,010,000

New
Development          262,000         89,000         425,000        493,000
                 -----------    -----------     -----------    -----------
Combined
Segments         $ 1,301,000    $ 1,172,000     $ 2,388,000    $ 2,785,000
                 ===========    ===========     ===========    ===========


CAPITAL EXPENDITURES

Syndication      $      ___     $      ___      $      ___     $      ___

Multi-family            ___            ___             ___            ___

New
Development        8,374,000     15,305,000      12,341,000     19,853,000
                 -----------    -----------     -----------    -----------
Combined
Segments         $ 8,374,000    $15,305,000     $12,431,000    $19,853,000
                 ===========    ===========     ===========    ===========

(a)  Includes   non-cash   income   comprised   of  equity  in   earnings   from
     unconsolidated affiliates.

(b)  Includes non-cash income comprised of deferred income earned.

(c)  Includes  the  allocation  of  certain  expenses  based upon  either  gross
     revenues or gross assets to the individual segments.


                                     11

<PAGE>



7.   SUMMARY INFORMATION

     The Company has entered into four joint venture arrangements regarding four
completed Development  Communities.  Two of such joint venture arrangements were
effective on April 1, 1999 and the other two  arrangements  were effective as of
May 1, 1999.  Pursuant to the joint venture  arrangements,  the Company sold 50%
interests in the Development Communities.  The Company has recorded its retained
interest  in  the  joint  venture   arrangements  under  the  equity  method  of
accounting.  The following sets forth the combined financial  information of the
joint ventures as of and for the six months ended July 31, 1999.


ASSETS

Cash                                                    $    982,000
Property, building and equipment-net                      39,038,000
Other assets                                                 151,000
                                                        ------------
                                                        $ 40,171,000
                                                        ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Construction and mortgage loans payable                 $ 27,336,000
Notes payable                                                127,000
Other liabilities                                            677,000
Stockholders' equity                                      12,031,000
                                                        ------------
                                                        $ 40,171,000
                                                        ============

REVENUES

Senior living revenues                                  $  2,613,000
                                                        ------------

EXPENSES

Senior living operating expenses                        $  2,197,000
Interest                                                   1,112,000
Depreciation                                                 380,000
                                                        ------------
                                                           3,689,000
                                                        ------------
Net loss                                                $ (1,076,000)
                                                        ============



ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

     Unless the  context  otherwise  requires,  (i) all  references  herein to a
"Fiscal" year refer to the fiscal year beginning on February 1 of that year (for
example,  "Fiscal 1998" refers to the fiscal year beginning on February 1, 1998)
and (ii) all references to the Company,  include the Company,  its  subsidiaries

                                        12

<PAGE>

and its predecessors  taken as a whole.  Capitalized  terms used but not defined
herein shall have the same meanings as set forth in the Company's  annual report
on Form 10-K for the Fiscal Year ending January 31, 1999.


SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

     The  Company is  including  the  following  cautionary  statements  to make
applicable  and take  advantage  of the safe  harbor  provisions  of the Private
Securities Litigation Reform Act of 1995 for any forward-looking statements made
by,  or on  behalf,  of the  Company  in this  Quarterly  Report  on Form  10-Q.
Forward-looking  statements  include  statements  concerning plans,  objectives,
goals,  strategies,  future events or performance and underlying assumptions and
other  statements  which are other than  statements  of historical  facts.  Such
forward-looking statements may be identified,  without limitation, by the use of
the words  "anticipates",  "estimates",  "expects",  "intends",  "believes"  and
similar  expressions.  From time to time, the Company or one of its subsidiaries
individually may publish or otherwise make available forward-looking  statements
of this nature. All such  forward-looking  statements,  whether written or oral,
and  whether  made by or on  behalf  of the  Company  or its  subsidiaries,  are
expressly  qualified by these  cautionary  statements  and any other  cautionary
statements which may accompany the forward-looking  statements. In addition, the
Company  disclaims any  obligation to update any  forward-looking  statements to
reflect events or circumstances after the date hereof.

     Forward-looking  statements  made by the  Company  are subject to risks and
uncertainties  that could cause  actual  results or events to differ  materially
from those expressed in, or implied by, the  forward-looking  statements.  These
forward-looking  statements  include,  among others,  statements  concerning the
Company's revenue and cost and expense trends, the number and economic impact of
anticipated acquisitions and new developments,  planned capital expenditures and
financing  needs and  availability.  Investors  or other  users of the  forward-
looking  statements  are cautioned  that such  statements are not a guarantee of
future performance by the Company and that such  forward-looking  statements are
subject to risks and  uncertainties  that could cause  actual  results to differ
materially from those expressed in, or implied by, such statements.  In addition
to other factors and matters discussed elsewhere herein, the following are some,
but not all, of the important  factors  that, in the view of the Company,  could
cause actual results to differ  materially  from those  discussed in the forward
looking statements:

     1.   The  ability  of  the  Company  to  service   its   substantial   debt
          obligations.

     2.   The ability of the Company to pay Management Contract Obligations from
          the cash flow generated by the Syndicated  Communities  and the impact
          of the terms of future Syndications.

     3.   The need for the Company to utilize  cash from  operations  and obtain
          additional financing to pursue its Development Plan.

     4.   The Company's ability to identify and Syndicate  suitable  acquisition
          opportunities, a significant source of revenues for the Company.

                                        13

<PAGE>

     5.   The Company's ability to identify suitable development  opportunities,
          pursue  such  opportunities,   complete   development,   lease-up  and
          effectively operate the Development Communities.

     6.   The ability of the Company to obtain  sufficient joint venture capital
          for its Development  Program on favorable  terms,  anticipated to be a
          significant source of revenues for the Company.

     7.   The  impact of  mortgage  defaults  and/or  foreclosures  relating  to
          Multi-Family Properties (as defined below) on the Company's ability to
          collect on its MultiFamily Notes (as defined below).

     8.   Governmental  regulatory actions and initiatives,  including,  without
          limitation,  those relating to healthcare  laws,  benefiting  disabled
          persons,   government   mortgage   insurance  and  subsidy   programs,
          environmental requirements and safety requirements.

     9.   The ability to attract  seniors with  sufficient  resources to pay for
          the Company's services.

     10.  Changes in  anticipated  construction  costs,  operating  expenses and
          start-up losses relating to the Company's new Development Plan.

     11.  Unanticipated  delays in the Company's  Development  Plan,  including,
          without limitation, permitting, licensing and construction delays.

     12.  Changes in general economic conditions, including, but not limited to,
          factors  particularly  affecting real estate and the capital  markets,
          including, but not limited to, changes in interest rates.

     13.  Changes in operating  costs of senior living  communities,  including,
          without limitation, staffing and labor costs.

     14.  The Company's ability to attract and retain qualified personnel.

     15.  Competitive factors affecting the long-term care services industry.

     16.  The  potential  recourse  and  guarantee  obligations  of the Company,
          including,   without   limitation,   the   correction   of   hazardous
          environmental  conditions  relating to the  mortgage  financing of the
          senior living communities.

     17.  The potential  liabilities  arising from the  Company's  status as the
          general partner of Syndicated Communities.

     18.  The potential impact of recent net losses.

     19.  The  potential  impact of computer  related Year 2000  problems on the
          Company's  operations,  including  the  ability  of  the  Company  and
          material  third parties to identify  and/or  address all material Year

                                       14
<PAGE>

          2000 issues and implement contingency plans. OVERVIEW

     The Company is a fully-integrated  provider of senior living accommodations
and services  which  acquires,  develops and manages  senior living  communities
which provide independent and assisted-living  services.  The Company's revenues
have been, and are expected to continue to be, primarily  derived from the sales
of  partnership  interests  ("Syndications")  of  partnerships  it  organizes to
acquire real properties.  Since 1986, the Company has focused on the acquisition
and   Syndication   of   existing   senior   living   communities   ("Syndicated
Communities").  The Company  has  established  a new  development  program  (the
"Development  Plan")  pursuant  to  which  it  is  building  new  senior  living
communities which offer  independent and assisted living services  ("Development
Communities").  The Company currently owns the Development  Communities pursuant
to joint venture arrangements or operates such communities pursuant to long-term
leases.  To the  extent  that the  Company's  Development  Plan is  successfully
implemented, the Company anticipates that the percentage of its revenues derived
from Syndications would decrease and the percentage of its revenues derived from
the Development Communities would increase and, the Company believes, over time,
become the primary source of the Company's revenues.

     Historically,  the Company has arranged for the acquisition and development
of senior living  communities and multi-family  properties by utilizing mortgage
financing and Syndications.  The multi-family properties,  which were Syndicated
by the  Company  prior to 1986,  are not owned or managed by the  Company.  Such
properties are owned by their respective Owning  Partnerships and are managed by
third party managing  agents.  The senior living  communities  Syndicated by the
Company  since 1986 are managed by the  Company but are owned by the  respective
Owning Partnerships and not by the Company.

     Future revenues,  if any, of the Company relating to previously  Syndicated
Communities  would  primarily arise in the form of (i) deferred income earned on
the sale of the Purchased  Interests in the related  Owning  Partnerships,  (ii)
management  fees,  (iii) amounts  payable by the Investing  Partnerships  to the
Company in the event of the subsequent sale or refinancing of such  communities,
(iv) interest income on purchase notes receivable, and (v) earnings derived from
the   Company's   equity   interests  in  Owning   Partnerships   and  Investing
Partnerships.  Future  revenues,  if any,  of the  Company  relating  to  future
Syndicated  Communities would primarily arise from any initial profit recognized
upon  completion  of the  Syndication  and  from the same  items  listed  in the
previous sentence.

     The  Company  intends to continue  to arrange  for future  acquisitions  of
existing  senior  living  communities  by utilizing  mortgage  financing  and by
arranging Syndications,  and anticipates that between six and twelve communities
will be acquired and Syndicated in this manner during the next two years. Future
Syndications  will require the  allocation of funds  generated by the Company to
cover the  Company's  initial  costs  relating to the  Syndication  transactions
(primarily any funds required to acquire the property above the amounts received
from the  mortgage  financing  obtained,  the costs of any  improvements  to the
property deemed  necessary and the costs  associated with arranging for the sale
of the partnership  interests).  The Company typically pays these costs from the
proceeds it receives from its sale of the  Purchased  Interests to the Investing
Partnership.  In addition, future Syndications may require the allocation of the

                                       15

<PAGE>

Company's  funds to  satisfy  any  associated  Management  Contract  Obligations
(including  payment of required  returns for  distribution to limited  partners)
that are not funded from the respective property's operations.

     The Company has  instituted  a  Development  Plan  pursuant to which it has
completed  construction of and opened eight  Development  Communities as of July
31, 1999, and has commenced construction on three additional communities. During
the next two years of the plan, the Company intends to commence  construction on
between six and twelve additional new Development Communities. The Company plans
to own pursuant to joint  venture  arrangements  or lease  pursuant to long-term
operating leases or similar  arrangements  the Development  Communities that are
being  developed under the plan. The Company will manage and operate each of the
Development Communities.  The Company estimates that the cost of developing each
of the new Development  Communities  (including  reserves necessary to carry the
community  through its lease-up  period)  utilizing  mortgage  financing will be
approximately $10.5 million. The Company expects to complete the construction of
the remaining three  Development  Communities  under  construction by the end of
Fiscal  1999.  These  three  Development  Communities,   along  with  the  eight
communities  already  completed  pursuant to the  Development  Plan,  contain an
aggregate of 1,488 senior living apartment  units. The six to twelve  additional
new communities  which the Company intends to commence  construction on over the
next two years will contain  between  1,008 and 1,512  additional  senior living
apartment units.  The Company will use a substantial  portion of the proceeds of
the Company's  initial  public  offering which  occurred in March,  1998,  funds
generated by its  business  operations,  mortgage  construction  financing,  the
proceeds  of  joint  venture  arrangements  for,  anticipated   refinancings  of
construction  financing on, and/or  sale-leasebacks  of,  completed  Development
Communities,  and may  complete  additional  new  issuances  of  debt or  equity
securities to finance the development,  construction and initial operating costs
of  additional  Development  Communities.  Four  of  the  completed  Development
Communities are being operated by the Company pursuant to long-term leases.  The
Company  may use  additional  long-term  leases or  similar  arrangements  which
require the  investment  of little or no capital on the part of the Company,  to
the extent necessary to proceed with this  Development  Plan. In April 1999, the
Company  entered  into  joint  venture  arrangements  regarding  four  completed
Development Communities,  two of such joint venture arrangements being effective
as of April 1, 1999 and the other two being  effective May 1, 1999.  Pursuant to
each joint venture arrangement, the Company sold a 50% interest in a Development
Community to a third party. The Company realized a profit from each of the sales
and earns management fees for managing each of the communities.  The third party
has the right to terminate  the Company's  management  upon thirty days' written
notice. The third party receives a cumulative  priority return on its investment
from all cash flow generated by the community and any excess cash flow is shared
50% by  the  Company  and  50%  by  the  third  party.  The  Company  no  longer
consolidates  these  Development  Communities  into its  consolidated  financial
statements but recognizes its investment in these Development  Communities under
the equity basis of accounting.

EARNINGS

     The Company  recorded  net income of $1.5  million and $3.1 million for the
three and six months ended July 31, 1999, compared to a net loss of $6.6 million
and $8.4 million for the three and six months ended July 31, 1998.


                                       16

<PAGE>

RESULTS OF OPERATIONS

o    Revenues - Overview

     Total  revenues for the three months ended July 31, 1999 were $24.4 million
as  compared  to  $15.9  million  for the  three  months  ended  July  31,  1998
representing  an increase of $8.5 million or 53.5%.  Total  revenues for the six
months ended July 31, 1999 were $51.2  million as compared to $34.9  million for
the six months ended July 31, 1998  representing an increase of $16.3 million or
46.7%.

o    Syndication Communities

     Revenues  from this segment are derived  from sales of general  partnership
interests in Owning  Partnerships  to  Investing  Partnerships,  recognition  of
deferred income with respect to previous sales of general partnership interests,
interest  on  Purchase  Notes  received  by  the  Company  from  such  Investing
Partnerships  as part of the purchase  price paid for such  general  partnership
interests,  property  management  fees received by the Company and the Company's
share of  income  and loss of the  entities  based  upon  its  retained  general
partnership  interests.  Such general partnership interests were historically 1%
of the  Owning  Partnership  and  1% of the  Investing  Partnership.  In  recent
Syndications,  the Company has been  selling 50%  partnership  interests  in the
Owning  Partnerships.  Due to  this  increased  percentage  in  ownership  being
retained by the Company, the Company consolidates these Owning Partnerships into
its consolidated financial statements. As a result of this consolidation, senior
living revenues derived from these Owning  Partnerships will also be a source of
revenues for this segment.

<TABLE>
<CAPTION>

<S>                                  <C>                   <C>                     <C>                    <C>
                                           THREE MONTHS ENDED JULY 31,                   SIX MONTHS ENDED JULY 31,
                                    ------------------------------------        ---------------------------------------
                                         1998                   1999                   1998                    1999
                                    -----------------     --------------        ------------------      ---------------


Sales............................    $ 7,481,000           $ 8,638,000             $17,961,000            $16,853,000
Syndication fee income...........      1,912,000             1,624,000               4,087,000              3,478,000
Interest income..................        827,000               807,000               2,515,000              2,173,000
Property management fees in
related parties..................        724,000               841,000               1,712,000              1,924,000
Senior living revenues...........             --                35,000                      --                 35,000

Equity in earnings in
affiliated entities..............        164,000               235,000                 322,000                406,000
                                     -----------           -----------             -----------            -----------
Total revenues...................     11,108,000            12,180,000              26,597,000             24,869,000
                                     ===========           ===========             ===========            ===========

Cost of sales....................     10,210,000             5,661,000              18,576,000             12,894,000
Selling..........................      1,413,000             1,140,000               3,214,000              2,586,000
Interest expense.................        948,000               943,000               2,231,000              1,839,000
General and administrative.......      1,883,000             1,575,000               3,940,000              2,993,000
Officers' compensation...........        213,000               149,000                 457,000                291,000
Senior living operating
expenses.........................             --                15,000                      --                 15,000

Depreciation and
amortization.....................         87,000               109,000                 207,000                282,000
                                     -----------           -----------             -----------            ------------
Total costs and expenses.........     14,754,000             9,592,000              28,625,000             20,900,000
                                     -----------           -----------             -----------            -----------
Net (loss) income ...............    $(3,646,000)          $ 2,588,000             $(2,028,000)           $ 3,969,000
                                     ===========           ===========             ===========            ===========

</TABLE>

                                       17

<PAGE>



     Sales for the three  months  ended  July 31,  1999  were  $8.6  million  as
compared to $7.5 million for the three months ended July 31, 1998,  representing
an increase of $1.1 million or 14.7%.  The increase was attributable to the sale
of more partnership units in the three months ended July 31, 1999 as compared to
the three months  ended July 31,  1998.  Sales for the six months ended July 31,
1999 were $16.9  million as compared to $18.0  million for the six months  ended
July 31, 1998, representing a decrease of $1.1 million or 6.1%. The decrease was
attributable to the sale of fewer partnership units in the six months ended July
31, 1999 as compared to the six months ended July 31, 1998.

     The primary  factors that affect the number of partnership  units available
for sale are (i) the availability of senior living  communities for Syndication,
(ii) the terms of the Syndications and (iii) the initial cash flow of the senior
living communities being Syndicated. More favorable Syndication terms along with
a greater initial cash flow of the Syndicated  Communities  will yield a greater
number of units  available to be sold.  Syndication  terms become more favorable
for the Company if there is an increase in the ratio of (a) the  purchase  price
paid  to the  Company  by the  Investing  Partnership  for its  interest  in the
Operating Partnership, to (b) the initial cash flow of the Syndicated Community.
The  Syndications  completed in the three and six months ended July 31, 1999 had
more favorable  Syndication  terms as partially offset by communities with lower
initial cash flows than the  Syndications  completed in the three and six months
ended July 31, 1998.

     Syndication  fee income for the three  months  ended July 31, 1999 was $1.6
million as compared to $1.9  million for the three  months  ended July 31, 1998,
representing  a  decrease  of  $300,000  or 15.8%.  The  decrease  is  primarily
attributable  to a decrease in the average  commission  rate  resulting  in less
commissions  paid on a greater  sales  volume in the three months ended July 31,
1999 as compared to the three months ended July 31, 1998. Syndication fee income
for the six months  ended July 31,  1999 was $3.5  million as  compared  to $4.1
million  for the six months  ended July 31,  1998,  representing  a decrease  of
$600,000 or 14.6%.  The decrease is primarily  attributable to a decrease in the
average  commission  rate  resulting in less  commissions  paid on a lower sales
volume in the six months ended July 31, 1999 as compared to the six months ended
July 31, 1998.

     Interest  income did not  materially  change in the three months ended July
31, 1999 as compared to the three months ended July 31,  1998.  Interest  income
was $2.2  million in the six  months  ended July 31,  1999 as  compared  to $2.5
million  in the six months  ended  July 31,  1998,  representing  a decrease  of
$300,000 or 12.0%.  The  decrease is  primarily  attributable  to less  interest
recognized  on Senior  Living  Notes in the six months  ended  July 31,  1999 as
compared  to the six  months  ended  July  31,  1998  due to the  sale of  fewer
partnership units during the last twelve months as compared to prior periods.

     Senior living revenue and senior living  operating  expenses of $35,000 and
$15,000,  respectively,  are derived  from the  Syndicated  Community  which the
Company owns a 50% general partnership interest.  Due to the Company retaining a
50% general partnership  interest,  the Company  consolidates the related Owning
Partnership into its consolidated financial statements.

                                    18

<PAGE>

     Cost of sales (which  includes  (i) the cash portion of the purchase  price
for Syndicated Communities plus related transaction costs and expenses, (ii) any
payments with respect to  Management  Contract  Obligations  other than payments
relating to previously  established  deferred  income  liabilities and (iii) any
increases in deferred income  liabilities  established in the relevant  periods)
for the three  months  ended July 31, 1999 was $5.7 million as compared to $10.2
million for the three  months ended July 31,  1998,  representing  a decrease of
$4.5 million or 44.1%.  Cost of sales for the six months ended July 31, 1999 was
$12.9  million as  compared  to $18.6  million in the six months  ended July 31,
1998,  representing  a  decrease  of $5.7  million  or 30.6%.  The  decrease  is
primarily  attributable to less funding of Management Contract Obligations and a
reduction  in the  aggregate  cash  portion of the  purchase  price plus related
transaction  costs and  expenses  for  Syndicated  Communities  incurred  by the
Company in the three month and six month periods ended July 31, 1999 as compared
to the three month and six month periods ended July 31, 1998. Due to the Company
selling  a 50%  partnership  interest  in  the  Owning  Partnerships  for  those
communities  Syndicated  in the three months  ended July 31,  1999,  the Company
recognized a lesser  aggregate cash portion of the purchase price as compared to
the prior period.  The  Communities  Syndicated in the three month and six month
periods ended July 31, 1999 had less favorable acquisition terms (in view of the
relationship  between  the  cumulative  initial  cash  flows  generated  by  the
properties and the cumulative purchase pries paid for such properties) as offset
by more  favorable  mortgage  financing than the  communities  Syndicated in the
three and six months ended July 31, 1998. Cost of sales and selling expenses (as
described  below) as a percentage  of sales and  syndication  fee income for the
three  months  ended July 31, 1999 was 66.3% as compared to 123.7% for the three
months ended July 31, 1998.  Cost of sales and selling  expenses as a percentage
of sales and  syndication  fee income for the six months ended July 31, 1999 was
76.1% as compared to 98.8% for the six months ended July 31, 1998. The decreases
are attributable to cost of sales and selling expenses  decreasing more than the
decrease in sales and syndication fee income.

     Several  factors,  including  the decline of the real estate  market in the
late 1980's and early 1990's,  which resulted in a number of distressed property
sales and limited  competition from other  prospective  purchasers,  allowed the
Company to acquire existing senior living communities at such time on relatively
favorable terms. Mortgage financing, however, was generally either not available
or available  only on relatively  unattractive  terms during this period,  which
made  acquisitions  more difficult because they either required large outlays of
cash or the use of mortgage financing on relatively  unfavorable terms.  Several
factors  have   contributed   towards  a  trend  to  less  favorable  terms  for
acquisitions  of senior living  communities,  including a recovery in the market
for senior living  communities and increased  competition from other prospective
purchasers  of senior living  communities.  The Company  acquired  senior living
communities  on less  favorable  terms in the three  months and six months ended
July 31,  1999 as  compared  to the three  months and six months  ended July 31,
1998.  The  Company  believes  that the general  trend  towards  less  favorable
acquisition terms experienced in the past will continue in the future. In recent
years,  however,  the Company has been able to obtain  mortgage  financing for a
greater  percentage of the purchase price and with more  favorable  terms (i.e.,
lower interest rates and longer  amortization  periods) than in previous  years.
This factor, combined with an overall reduction of interest rates, has partially
offset  the  factors  that have led to more  unfavorable  acquisition  terms.  A
significant  change  in these or other  factors  (including,  in  particular,  a
significant rise in interest rates) could prevent the Company from acquiring and

                                      19

<PAGE>

Syndicating  senior living  communities on terms favorable  enough to offset the
start-up  losses of the  Development  Communities  as well as the Company's debt
service obligations, Management Contract Obligations and overhead expenses.

     Selling  expenses for the three months ended July 31, 1999 was $1.1 million
as  compared  to  $1.4  million  for the  three  months  ended  July  31,  1998,
representing  a  decrease  of  $300,000  or 21.4%.  The  decrease  is  primarily
attributable  to a decrease in the average  commission  rate  resulting  in less
commissions  paid on a greater  sales  volume in the three months ended July 31,
1999 as compared to the three months ended July 31, 1998.  Selling  expenses for
the six months  ended July 31, 1999 was $2.6 million as compared to $3.2 million
in the six months  ended July 31, 1998,  representing  a decrease of $600,000 or
18.8%.  The  decrease is  primarily  attributable  to a reduction in the average
commission rates resulting in less commissions paid on lower sales volume on the
Syndications  completed in the six months ended July 31, 1999 as compared to the
six months ended July 31, 1998.

o    Multi-Family Properties

     Revenues  from  this  segment  are  comprised  of  interest  income  on the
Multi-Family  Notes and recognition of deferred  income from such  Syndications,
which income is being recognized on the installment method.

<TABLE>
<CAPTION>

<S>                                      <C>                    <C>                    <C>                    <C>
                                         THREE MONTHS ENDED JULY 31,                  SIX MONTHS ENDED JULY 31,
                                    ------------------------------------        -------------------------------------
                                         1998                   1999                   1998                   1999
                                    -----------------     --------------        ------------------      -------------
Deferred income earned.............  $   207,000           $   156,000             $   415,000           $    311,000
Interest income....................    2,723,000               942,000               4,465,000              2,349,000
                                     -----------           -----------             -----------           ------------
Total Revenues.....................    2,930,000             1,098,000               4,880,000              2,660,000
                                     ===========           ===========             ===========           ============
Selling............................      109,000               158,000                 418,000                268,000
Interest expense...................    3,712,000             4,053,000               7,284,000              7,870,000
General and administrative.........      463,000               146,000                 723,000                320,000
Loss on impairment of notes
and receivables ...................           --               713,000                      --                713,000
Officers compensation..............       53,000                14,000                  84,000                 31,000
Depreciation and
amortization.......................      952,000               974,000               1,756,000              2,010,000
                                     -----------           -----------             -----------           ------------
Total costs and expenses...........    5,289,000             6,058,000              10,265,000             11,212,000
                                     -----------           -----------             -----------           ------------
Net loss...........................  $(2,359,000)          $(4,960,000)            $(5,385,000)          $ (8,552,000)
                                     ===========           ===========             ===========           ============

</TABLE>

     Interest  income in the three  months  ended July 31, 1999 was  $900,000 as
compared to $2.7 million in the three months ended July 31, 1998, representing a
decrease of $1.8 million or 66.7%.  Interest income in the six months ended July
31, 1999 was $2.3  million as compared to $4.5  million in the six months  ended
July 31, 1998,  representing a decrease of $2.2 million or 48.9%.  The decreases
are  primarily  attributable  to (i) the  decrease  in the  remaining  amount of
investor  notes,  the  payment  of  which  generates  interest  on  the  related
Multi-Family  Purchase Notes, in the three and six months ended July 31, 1999 as
compared to the three and six months ended July 31, 1998 and (ii) the receipt of
excess  proceeds from the  refinancing of the mortgage debt on six  Multi-Family

                                       20

<PAGE>

Properties  in the three and six months  ended July 31,  1998 as  compared to no
such refinancings in the three and six months ended July 31, 1999.

     In the three and six months  ended July 31,  1999,  a  Multi-Family  Owning
Partnership  whose  mortgage was previously in default became aware that it will
lose its  property  through  mortgage  foreclosure.  As a  result,  the  Company
realized a non-cash loss on impairment of notes  receivables of $700,000,  which
represents  the  recorded  value of the  related  note and  receivables,  net of
established   reserves.   The  Company's  principal   stockholders   contributed
additional assets to the Company to provide additional  collateral for this note
and the related  receivables.  As a result of this  contribution  of  additional
assets,  the Company  recorded a capital  contribution  of $900,000 and believes
that the foreclosure will not effect its ability to collect this note. There was
no loss on impairment of notes and receivables in the three and six months ended
July 31, 1998.


o        DEVELOPMENT COMMUNITIES

     Revenues from this segment are derived from senior  living rental  revenues
from the Development  Communities  operated by the Company pursuant to long term
leases and from sales,  management  fees and equity  earnings  (losses) from the
Development Communities subject to joint venture arrangements.


<TABLE>
<CAPTION>
<S>                                      <C>                    <C>                    <C>                    <C>
                                         THREE MONTHS ENDED JULY 31,                  SIX MONTHS ENDED JULY 31,
                                    ------------------------------------        -------------------------------------
                                         1998                   1999                   1998                   1999
                                    -----------------     --------------        ------------------      -------------

Sales...........................     $        --           $10,000,000             $        --           $ 20,000,000
Senior living revenues..........       1,171,000             1,295,000               1,589,000              3,857,000
Other income....................         665,000                    --               1,350,000                     --
Equity in (losses) in
affiliated entities.............              --              (269,000)                     --               (269,000)
Interest income.................          48,000                77,000                 507,000                130,000
                                      ----------           -----------             -----------            -----------
Total revenues..................       1,884,000            11,103,000               3,446,000             23,718,000
                                      ==========           ===========             ===========            ===========
Costs of sales..................              --             3,383,000                      --              6,294,000
Senior living operating
expenses........................       1,219,000             2,137,000               2,165,000              5,080,000
Interest expense................         620,000                33,000               1,235,000              1,031,000
General and administrative......         304,000             1,455,000                 511,000              2,854,000
Officers compensation...........          34,000               137,000                  59,000                278,000

Depreciation and
amortization....................         262,000                89,000                 425,000                493,000
                                      ----------           -----------             -----------            -----------
Total costs and expenses........       2,439,000             7,234,000               4,395,000             16,030,000
                                      ----------           -----------             -----------            -----------
Net (loss) income...............      $ (555,000)          $ 3,869,000             $  (949,000)           $ 7,688,000
                                      ==========           ===========             ===========            ===========

</TABLE>

     In  April  1999,  the  Company  entered  into  joint  venture  arrangements
regarding  four  completed  Development  Communities,  two of such joint venture
arrangements  were effective as of April 1, 1999 and the other two  arrangements
were  effective as of May 1, 1999.  Pursuant to each joint venture  arrangement,
the Company sold a 50% interest in the Development Communities to Mr. Batchelor.
As a result,  the Company  recognized sales of $10.0 million in the three months
ended July 31, 1999 and $20.0 million in the six months ended July 31, 1999. The

                                      21

<PAGE>

costs of such  interests  were $3.4  million in the three  months ended July 31,
1999 and $6.3  million in the six months  ended July 31,  1999.  The  Company no
longer  consolidates  the Development  Communities  subject to the joint venture
arrangements into its consolidated  financial statements but rather reflects its
share of the loss under the equity  method of  accounting.  In the three and six
months  ended July 31,  1999,  the  Company's  share of the losses  amounted  to
$269,000. The average occupancy of the Development  Communities subject to joint
venture arrangements was 71.1% for the six months ended July 31, 1999.

     Senior  living  revenues and  operating  expenses  currently  represent the
rental  and  ancillary  revenues  and  expenses  generated  by  the  Development
Communities the Company operates  pursuant to long-term leases. In the three and
six months  ended July 31,  1998,  these items also  included  the  revenues and
expenses  of the  Development  Communities  owned  by the  Company  prior to the
Company entering into joint venture  arrangements  effective in April and May of
1999. The Company  realized  senior living revenues of $1.3 million in the three
months ended July 31, 1999 as compared to $1.2 million in the three months ended
July 31,  1998,  representing  an  increase  of  $100,000  or 8.3%.  The Company
realized senior living revenues of $3.9 million in the six months ended July 31,
1999 as  compared  to $1.6  million  in the six  months  ended  July  31,  1998,
representing an increase of $2.3 million or 143.8%.  The senior living operating
expenses  were $2.1  million in the three months ended July 31, 1999 as compared
to $1.2  million  in the three  months  ended  July 31,  1998,  representing  an
increase of $900,000 or 75.0%. The senior living operating  expenses for the six
months  ended July 31, 1999 was $5.1  million as compared to $2.2 million in the
six months  ended July 31,  1998,  representing  an increase of $2.9  million or
131.8%.  The  increases  in senior  living  rental  revenues  and  expenses  are
primarily  attributable  to the  Development  Communities  operated  pursuant to
long-term leases being in service for all of the three and six months ended July
31,  1999 as opposed to the same  Development  Communities  being in service for
only part of the three and six months ended July 31, 1998,  as partially  offset
by  the  Development   Communities   that  are  now  subject  to  joint  venture
arrangements  no  longer  being   consolidated  into  the  Company's   financial
statements.  The  average  occupancy  of the  Development  Communities  operated
pursuant to long-term leases was 62.1% for the six months ended July 31, 1999.

     Other income was $665,000 and $1.4 million,  respectively, in the three and
six  months  ended  July  31,  1998.  The  Company  earned  developer's  fees in
connection  with the four  Development  Communities  which the Company  operates
pursuant to  long-term  leases.  There was no other  income in the three and six
months ended July 31, 1999.

Expenses - Overview

     The  following  expenses  were  allocated  to each  segment  for  reporting
purposes based upon either gross revenues or gross assets. The Company, however,
does not view these  expenses as segment  related  but rather on a Company  wide
basis.

     General and  administrative  expenses were $3.2 million in the three months
ended July 31, 1999 as compared to $2.7  million in the three  months ended July
31,  1998,   representing  an  increase  of  $500,000  or  18.5%.   General  and
administrative  expenses were $6.2 million in the six months ended July 31, 1999
as compared to $5.2 million in the six months ended July 31, 1998,  representing
an increase of $1.0 million or 19.2%.  The increases are primarily  attributable

                                      23

<PAGE>

to  increases  in salary  costs,  professional  fees and other  office  costs in
arranging  for  the  acquisition  of  the  Company's   portfolio  of  Syndicated
Communities,  in managing the Company's portfolio of Syndicated  Communities and
in developing and managing the Company's  portfolio of  Development  Communities
which  portfolios,  in the  aggregate,  were  larger in the three and six months
ended July 31, 1999 than in the three and six months ended July 31, 1998.

     Interest  expense  did not  materially  change in the three and six  months
ended July 31, 1999 as compared to the three and six months ended July 31, 1998.
Interest expense includes  interest on debentures  ("Debenture  Debt") which are
secured by Multi-Family Notes (the "Purchase Note  Collateral").  During the six
months ended July 31, 1999 and the six months ended July 31, 1998, the Debenture
Debt had an average  interest rate of 11.8% and 12.05%,  respectively.  Interest
expense with respect to such debt for the six months ended July 31, 1999 and the
six months ended July 31, 1998 was $5.2 million and $3.9 million,  respectively.
When the Debenture Debt was structured, cash flow generated by the Purchase Note
Collateral  was not expected to fully fund the amount  necessary to pay interest
on the Debenture  Debt. As expected,  for the six months ended July 31, 1999 and
the six months ended July 31, 1998, the cash flow generated by the Purchase Note
Collateral  was less than the amount  required to pay interest on the  Debenture
Debt.

     Depreciation and amortization consists of (i) amortization of deferred loan
costs incurred in connection with debt issuances, (ii) amortization of leasehold
costs incurred in connection with four Development Communities which the Company
operates  pursuant to  long-term  leases,  and (iii)  depreciation  of building,
furniture and equipment of Development  Communities which the Company previously
owned  directly  and  currently  owns  pursuant to joint  venture  arrangements.
Depreciation  and  amortization  did not  materially  change in the three months
ended  July 31,  1999 as  compared  to the three  months  ended  July 31,  1998.
Depreciation  and amortization was $2.8 million in the six months ended July 31,
1999 as  compared  to $2.4  million  in the six  months  ended  July  31,  1998,
representing  an increase of $400,000 or 16.7%.  The increase is attributable to
(i) the increase in  amortization  of deferred loan costs due to additional debt
incurred by the Company,  (ii) the  amortization of leasehold  costs  associated
with the four  Development  Communities  operated  by the  Company  pursuant  to
long-term  leases,  and (iii)  the  depreciation  of  buildings,  furniture  and
equipment associated with the Development Communities owned by the Company prior
to the Company entering into joint venture arrangements.

LIQUIDITY AND CAPITAL RESOURCES

     The  Company   historically  has  financed  operations  through  cash  flow
generated by operations, Syndications and borrowings consisting of investor note
debt,  unsecured debt, mortgage debt and Debenture Debt. The Company's principal
liquidity  requirements are for payment of operating expenses,  costs associated
with  development  of Development  Communities,  debt service  obligations,  and
Management Contract Obligations.

     Cash flows used by operating  activities  for the six months ended July 31,
1999 were $3.1 million and were comprised of (i) net income of $3.1 million plus
(ii) adjustments for non-cash items of $3.2 million less (iii) the net change in
operating  assets and liabilities of $9.4 million.  The adjustments for non-cash

                                       23

<PAGE>

items is comprised of non-cash loss on impairment  of notes and  receivables  of
$700,000,  depreciation  and  amortization  of $2.8 million,  offset by deferred
income earned of $300,000.  Cash flows used by operating  activities for the six
months ended July 31, 1998 were $6.8 million and were  comprised of (i) net loss
of $8.4 million plus (ii)  adjustments  for non-cash  items of $2.0 million less
(iii) the net  change in  operating  assets and  liabilities  of  $400,000.  The
adjustments for non-cash items is comprised of depreciation  and amortization of
$2.4 million, offset by deferred income earned of $400,000.

     Net cash used by  investing  activities  for the six months  ended July 31,
1999 of $15.1  million was  comprised of an increase of building,  furniture and
equipment  of  $9.3  million,  an  increase  in  the  cost  of  the  Development
Communities  of $10.6 million,  an increase in  investments  in general  partner
interests in senior living  communities of $600,000 less the recovery on cost of
investment of $5.4 million.  Net cash used by investing  activities  for the six
months  ended July 31,  1998 of $12.9  million was  comprised  of an increase in
building,  furniture and  equipment of $7.7 million,  an increase in the cost of
the senior living  communities the Company is constructing of $4.7 million,  and
an  increase  in  investments  in general  partner  interests  in senior  living
communities of $500,000.

     Net cash provided by financing activities for the six months ended July 31,
1999 of $3.8 million was comprised of (i) proceeds from the issuance of new debt
of $32.7  million less debt  repayments of $24.8 million plus (ii) proceeds from
construction  mortgage  financing  of  $12.9  million  less  repayments  of $9.2
million,  less (iii)  payments of notes  payable of $1.7  million  less (iv) the
increase in other assets of $5.0 million less (v) the purchase of treasury stock
of $1.1 million.  Net cash provided by financing  activities  for the six months
ended July 31, 1998 of $35.3  million was  comprised  of (i)  proceeds  from the
issuance of new debt of $18.0 million less debt repayments of $11.7 million plus
(ii) proceeds from  construction and mortgage  financings of $6.4 million,  less
(iii)  payments  of notes  payable of $200,000  plus (iv) the  decrease in other
assets of $500,000 plus (v) the net proceeds of the initial  public  offering of
$22.3 million.

     At January 31, 1999, the Company had total indebtedness,  excluding accrued
interest and construction mortgage indebtedness on the Development  Communities,
of $168.8 million,  consisting of $69.8 million of Debenture Debt, $72.5 million
of unsecured  debt,  $5.0 million of mortgage debt and $21.5 million of investor
note debt, and the Company had cash and cash  equivalents at January 31, 1999 of
$22.8  million.  As of July 31, 1999, the Company  decreased  investor note debt
from $21.5  million to $19.8  million,  decreased  unsecured  debt from $72.5 to
$63.6 million and increased  Debenture Debt from $69.8 million to $88.4 million.
As a result,  the total  indebtedness  increased  from $168.8  million to $176.8
million and the Company had cash and cash  equivalents  at July 31, 1999 of $8.4
million.

     Of the principal amount of total indebtedness at January 31, 1999 described
above,  $29.4  million  becomes due in the fiscal year ending  January 31, 2000;
$35.3  million  becomes due in the fiscal year ending  January 31,  2001;  $38.3
million  becomes due in the fiscal year ending  January 31, 2002;  $22.1 million
becomes due in the fiscal year ending  January 31, 2003;  $10.1 million  becomes
due in the fiscal year ending January 31, 2004, and the balance of $33.6 million
becomes due thereafter. Of the amount maturing in the fiscal year ending January
31, 2000,  $1.9 million is Investor  Note Debt of which the Company  repaid $1.8

                                     24

<PAGE>

million  through  the  collection  of  investor  notes and  intends to repay the
balance  through the collection of investor  notes.  The balance,  approximately
$27.5  million,  includes  $7.9 million of Debenture  Debt and $19.6  million of
unsecured  debt of which $17.0  million has been repaid  through the issuance of
new Debenture Debt. The Company expects to repay a portion of the remaining debt
maturing in the current  year with funds  generated  by the  Company's  business
operations and the balance of the indebtedness through the issuance of new debt.

     First mortgage loans were obtained to finance approximately 80% of the cost
of developing seven  Development  Communities.  The interest rate on four of the
loans  equals  the  30-day  LIBOR  plus 2 3/4% per  annum.  The fifth loan bears
interest at the lender's  prime rate plus 1.5% per annum.  The sixth and seventh
loans bear interest at the lender's  prime rate for the first fifteen months and
then  converts  to LIBOR  plus 2 3/4% per  annum for the  following  twenty-four
months. These loans mature between November, 1999 and February, 2001. As of July
31,  1999,  total  funding  under such first  mortgage  loans  amounted to $34.7
million.  In April,  1999, the Company  entered into joint venture  arrangements
regarding  four  completed  Development  Communities,  two of such joint venture
arrangements  being  effective  as of April  1,  1999 and the  other  two  being
effective  as of May 1, 1999.  As a result,  the  Company  did not  reflect  the
mortgages  relating to  Development  Communities on its  consolidated  financial
statements  as of July  31,  1999.  At July 31,  1999,  the  total  construction
mortgages reflected in the Company's  consolidated financial statements was $7.3
million. The Company has guaranteed the mortgages on the Development Communities
subject to joint venture  arrangements and such guarantees remain in effect. The
Company  intends to pursue  similar  joint  venture  arrangements  regarding the
additional  Development  Communities  to be  developed.  The Company  intends to
increase its construction loans payable as it pursues its Development Plan.

     The  Company's  debt  obligations  contain  various  covenants  and default
provisions,  including  provisions  relating  to, in some  obligations,  certain
Partnerships,  Owning  Partnerships  or affiliates  of the Company.  At July 31,
1999, the Company had a net worth of $38.6 million.  Pursuant to one obligation,
the Company is  required to maintain a net worth of no less than $35.3  million.
Certain  obligations of the Company contain  covenants  requiring the Company to
maintain  maximum ratios of the Company's  liabilities to its net worth. At July
31, 1999, the most  restrictive  covenant  requires that the Company  maintain a
ratio of liabilities to consolidated  net worth of no more than 10 to 1. At July
31, 1999, the Company's ratio was 7.0 to 1. In addition,  certain obligations of
the Company provide that an event of default will arise upon the occurrence of a
material  adverse  change in the  financial  condition  of the Company or upon a
default in other obligations of the Company.

     The Company has utilized mortgage financing and Syndications to arrange for
the acquisitions of the Syndicated  Communities which it operates. It intends to
continue this practice for future  acquisitions of Syndicated  Communities.  The
limited  partners are entitled to receive for a period not to exceed  five-years
specified  distributions  equal to 11% to 12% per  annum of their  then  paid-in
scheduled capital  contributions.  Pursuant to the management contracts with the
Owning  Partnerships,  for such  five-year  period,  the Company has  Management
Contract Obligations.  During the six months ended July 31, 1999, the Syndicated
Communities  with  respect to which the  Company  had such  Management  Contract
Obligations  distributed to the Company, after payment of all operating expenses

                                       25
<PAGE>

and debt service, an aggregate of $4.3 million, for application to the Company's
Management Contract  Obligations.  During such period, the Company's  Management
Contract  Obligations  exceeded  such  distributions  by an  aggregate  of  $7.7
million.  The $7.7 million of funding that was required in respect to Management
Contract  Obligations  in the six  months  ended  July 31,  1999  was  primarily
attributable to (i) an increase in the scheduled  capital  contributions  by the
limited  partners on which the Company is required to pay the specified  rate of
return,  (ii)  a  decrease  in  the  average  occupancy  of  certain  Syndicated
Communities  in the  Company's  portfolio,  and (iii) an increase  in  operating
expenses of the same Syndicated Communities.

     The  aggregate  gross  amount  (before  considering  the cash flow from the
properties) of Management  Contract  Obligations  relating  solely to returns to
limited partners based on existing management contracts is $10.0 million for the
remaining portion of Fiscal 1999, which will increase to $21.0 million in Fiscal
2000, and decrease to $17.5 million in Fiscal 2001, decrease to $10.2 million in
Fiscal  2002,  decrease  to $4.7  million in Fiscal  2003 and  decrease  to $1.0
million in Fiscal 2004.  Such amounts of  Management  Contract  Obligations  are
calculated based upon all remaining scheduled capital contributions with respect
to fiscal  years  1999  through  2004.  Actual  amounts of  Management  Contract
Obligations  in  respect of such  contracts  will vary based upon the timing and
amount of such capital  contributions.  Furthermore,  such amounts of Management
Contract  Obligations  are  calculated  without  regard to  Management  Contract
Obligations relating to future Syndications.

     The aggregate amount of the Company's  Management Contract Obligations will
depend upon a number of factors, including, among others, the expiration of such
obligations for certain partnerships,  the cash flow generated by the Syndicated
Communities and the terms of future  Syndications.  The Company anticipates that
for at least two years the  Management  Contract  Obligations,  with  respect to
existing  and future  Syndications,  will exceed the cash flow  generated by the
related Syndicated  Communities,  which will result in the need to utilize funds
generated  by  the  Company  from  sources  other  than  the  operations  of the
Syndicated  Communities to make Management  Contract  Obligations  payments.  In
general,  the payment of  expenses  arising  from  obligations  of the  Company,
including  Management  Contract  Obligations,  have  priority over earnings that
might  otherwise be available  for  distribution  to  shareholders.  The Company
intends to structure future Syndications to minimize the likelihood that it will
be  required  to  utilize  the  cash it  generates  to pay  Management  Contract
Obligations, but there can be no assurance that this will be the case.

     The initial  five-year  term of the  management  contracts  and the related
Management  Contract  Obligations have expired for thirteen Owning  Partnerships
and their seventeen related Investing Partnerships.  Although the Company has no
obligation  to  fund  operating  shortfalls  after  the  five-year  term  of the
management contracts, as of July 31, 1999, the Company had advanced an aggregate
of  approximately  $3.2  million of which  $954,000 was funded in the six months
ended July 31, 1999,  to nine of these  Owning  Partnerships  to fund  operating
shortfalls. All such advances are recorded in the "notes and receivables" on the
Company's Consolidated Balance Sheet.


                                      26

<PAGE>

     In  the  past,  limited  partners  have  been  allowed  to  prepay  capital
contributions.  The percentage of the prepayments  received upon the closings of
the sales of limited partnership  interests in Investing  Partnerships was 75.4%
for Fiscal 1998 and 67.7% for the six months ended July 31, 1999. Prepayments of
capital  contributions  do not result in the prepayment of the related  Purchase
Notes held by the  Company.  Instead,  such amounts are loaned to the Company by
the  Investing  Partnership.  As a  result  of  such  loans  and  the  crediting
provisions of the related purchase agreements,  the Company records the Purchase
Notes net of such loans. Therefore, these prepayments act to reduce the recorded
value of the Company's note  receivables  and reduce interest income received by
the Company. Pursuant to the terms of the Syndication offerings, the Company has
the option not to accept  future  prepayments  by  limited  partners  of capital
contributions. The Company has not determined to what extent it will continue to
accept prepayments by limited partners of capital contributions.

     As of July 31, 1999,  the Company holds 157 Purchase  Notes  ("Multi-Family
Notes")  which are  secured by  controlling  interests  in  Multi-Family  Owning
Partnerships  which own 118 multi-family  properties that were Syndicated by the
Company  prior  to 1986  (the  "Multi-Family  Properties").  Although  it has no
obligation to do so, the Company has also made advances to various  Multi-Family
Owning Partnerships to support the operation of their properties, which advances
are  included  in  the  "notes  and  receivables"   recorded  on  the  Company's
Consolidated  Balance Sheet. The Multi-Family Notes and related advances entitle
the Company to receive all cash flow and sale or refinancing  proceeds generated
by the respective  Multi-Family Property until the Multi-Family Note and related
advances are satisfied. As of July 31, 1999, the recorded value, net of deferred
income, of Multi-Family  Notes was $100.9 million.  All but  approximately  $4.5
million of the $63.4 million of advances  included in the "notes and receivable"
recorded on the Company's  Consolidated Balance Sheet as of July 31, 1999 relate
to advances to Multi-Family Owning Partnerships.

     Fourteen of the  Multi-Family  Owning  Partnerships are in default on their
respective  mortgages.  Seven of these Owning Partnerships have obtained workout
agreements  with terms of from one to nine years.  HUD's policies  regarding the
granting of workout  agreements have become more restrictive in recent years and
there can be no  assurance  that HUD will  renew  these  workout  agreements  or
restructure  the related  mortgage  debt when these workout  agreements  expire.
Within the last twelve  months HUD has taken steps to  foreclose on seven of the
defaulted mortgages.  Four of the relevant  Multi-Family Owning Partnerships are
negotiating with HUD to obtain mortgage restructurings to cure the defaults. The
recorded  value of  these  receivables,  net of  established  reserves,  is $5.8
million.  Two of the relevant  MultiFamily  Owning  Partnerships are negotiating
with a mortgage  lender to cure their defaults by refinancing  their  mortgages.
The recorded value of these receivables,  net of established  reserves,  is $1.0
million.  The seventh  Multi-Family  Owning  Partnership  will lose its property
through  foreclosure.  As a result,  the  Company  realized a  non-cash  loss of
$700,000 in the second  quarter of fiscal  year of 1999,  which  represents  the
recorded  value of the note and  receivable,  net of established  reserves.  The
Company's principal stockholders contributed additional collateral for this note
and the related  receivables.  As a result of this  contribution  of  additional
assets,  the Company  recorded a capital  contribution  of $900,000 and believes
that this  foreclosure  will not effect its ability to collect this note.  It is
possible that the remaining thirteen  Multi-Family Owing Partnerships  currently
in  default  on  their  mortgages  will  also  lose  their  properties   through
foreclosure.  In  addition,  there can be no assurance  that other  Multi-Family

                                       27

<PAGE>

Owning Partnerships will not default on their mortgages or lose their properties
through  foreclosure.  As of July 31, 1999, the recorded value,  net of deferred
income,  of the  MultiFamily  Notes and  related  advances  held by the  Company
relating to the thirteen  Multi-Family  Owning Partnerships still in default was
$26.4 million.  The Company has established  reserves of $7.3 million to address
the possibility  that these  Multi-Family  Notes and related advances may not be
collected in full.  It should be noted that in Fiscal 1998 and  previous  years,
six Multi-Family  Owning  Partnerships whose mortgages had been in default cured
those defaults by refinancing  their mortgages with new mortgage  financings and
now have fully performing  mortgages.  Other  Multi-Family  Owning  Partnerships
intend to cure their mortgage  defaults by refinancing  or  restructuring  their
mortgages in the future,  although  there can be no assurance  that this will be
the case. The Company neither owns nor manages the Multi-Family Properties,  nor
is it the general partner of any Multi-Family  Partnerships but rather holds the
related   MultiFamily  Notes  and  related  advances  relating  to  Multi-Family
Properties  as  receivables.   The  Company,  therefore,  has  no  liability  in
connection with these mortgage defaults.

     The  Multi-Family  Properties  were  typically  built or acquired  with the
assistance  of programs  administered  by HUD that provide  mortgage  insurance,
favorable  financing terms and/or rental assistance payments to the owners. As a
condition to the receipt of assistance  under these and other HUD programs,  the
properties must comply with various HUD requirements,  including  limiting rents
on these  properties to amounts  approved by HUD. Most of the rental  assistance
payment contracts  relating to the Multi-Family  Properties will expire over the
next few years.  In view of the foregoing,  there can be no assurance that other
MultiFamily  Owning  Partnerships  will not  default  on their  mortgages,  file
bankruptcy  petitions,  and/or lose their properties  through  foreclosure.  The
Company neither owns nor manages these properties, nor is it the general partner
of any  Multi-Family  Owning  Partnerships,  but rather,  holds the Multi-Family
Notes and related  advances as receivables.  Any such future  mortgage  defaults
could,  and any such future  filings of bankruptcy  petitions or the loss of any
such property through foreclosure would, cause the Company to realize a non-cash
loss equal to the recorded  value of the applicable  Multi-Family  Note plus any
related advances,  net of any deferred income recorded and any reserves for such
Multi-Family  Note and advances  previously  established  by the Company,  which
would reduce such loss.  In addition,  the Company  could be required to realize
such a  non-cash  loss even in the  absence  of  mortgage  defaults,  bankruptcy
petitions or the loss of any such property  through  foreclosure if such note is
considered  impaired.   Such  impairment  would  be  measured  under  applicable
accounting rules. Such losses, if any, while non-cash in nature, could adversely
affect the Company's business, operating results and financial condition.

     HUD has introduced  various  initiatives to restructure its housing subsidy
programs by  increasing  reliance on prevailing  market  rents,  and by reducing
spending on future rental  assistance  payment contracts by, among other things,
limiting  the term and rent  levels  when  renewing  expiring  contracts  and by
restructuring  mortgage  debt on those  properties  where a  decline  in  rental
revenues is anticipated.  Three Multi-Family  Owning Partnerships have had their
HUD-insured  mortgage debt restructured and other  partnerships have applied for
restructurings. Due to uncertainty regarding the final policies that will result
from these  initiatives  and numerous  other factors that affect each  property,
which can  change  over  time  (including  the local  real  estate  market,  the
provisions of the mortgage debt  encumbering the property,  prevailing  interest
rates and the  general  state of the  economy),  the  Company  cannot  determine

                                       28

<PAGE>

whether these  initiatives  will have an impact on the  Multi-Family  Properties
and, if there is an impact, whether the impact will be positive or negative.

     Certain of the Multi-Family Owning Partnerships intend to take advantage of
the new HUD  initiatives  and/or  improving  market  conditions  to  either  (i)
refinance  their  HUD-insured  mortgages with  conventional  mortgage  financing
and/or (ii) sell their Multi-Family Properties.

     In some cases,  the  Multi-Family  Owning  Partnerships  will make  certain
improvements to the properties and may not renew rental assistance  contracts as
part of a strategy to reposition those  Multi-Family  Properties as market-rate,
non-subsidized  properties.  Seventeen of such MultiFamily  Owning  Partnerships
have refinanced their HUD-insured mortgages with conventional mortgage financing
and a number of others have applications for commitments  pending. To the extent
that any of these Multi-Family  Owning Partnerships  complete such actions,  the
Company believes that the ability of the Investing  Partnerships relating to the
Multi-Family  Properties (the  "Multi-Family  Investing  Partnerships")  to make
payments to the Company on their respective  Multi-Family Notes will be enhanced
and  accelerated.  In Fiscal 1998,  the Company  received $2.6 million of excess
refinancing  proceeds as holder of the related  MultiFamily Notes and expects to
receive excess  refinancing  proceeds from the refinancing of other Multi-Family
Properties  in Fiscal  1999.  However,  there  can be no  assurance  that  these
additional  Multi-Family  Owning  Partnerships  will be able to refinance  their
mortgages or will be able to  successfully  reposition  any of the  Multi-Family
Properties.

     In addition,  one Multi-Family  Property and controlling interests in eight
Multi-Family  Owning Partnerships were sold to third parties in Fiscal 1998. The
Company  succeeded to these  controlling  interests by acquiring the  collateral
securing  the related  Multi-Family  Notes upon such Notes  becoming due without
being paid and  concurrently  selling  such  collateral  to Mr.  Batchelor.  The
Company  recognized $26.4 million in sale proceeds as a result of these sales in
Fiscal 1998. A significant  portion of sales  proceeds were generated from sales
to  Mr.  Batchelor.  Several  Multi-Family  Owning  Partnerships  are  currently
negotiating  the terms of offers  to  purchase  their  properties.  The  Company
expects to receive  additional  sale proceeds from any such  transactions  which
occur in Fiscal 1999. There can be no assurance,  however,  that additional sale
transactions will actually close.

     The  future  growth  of the  Company  will  be  based  upon  the  continued
acquisition  and  Syndication  of existing  senior  living  communities  and the
construction of Development  Communities.  The Company  anticipates that it will
acquire between six and twelve existing senior living  communities over the next
two years.  It is  anticipated  that  acquisitions  of  existing  senior  living
communities  will be arranged by utilizing a combination  of mortgage  financing
and  Syndications.  The  Company  holds a contract  to  acquire a senior  living
community  in  Denver,  Colorado.  The  Company  regularly  obtains  acquisition
mortgage financing from two different  commercial  mortgage lenders and, in view
of its ready  access to such  mortgage  financing,  has not sought any  specific
commitments   or  letters  of  intent  with   regard  to  future,   unidentified
acquisitions.  Similarly, the Company believes that it has sufficient ability to
arrange  for  acquisitions  of existing  senior  living  communities  in part by
Syndications.

     In a typical  Syndication,  limited  partners  agree to pay  their  capital
contributions  over a five-year  period,  and  deliver  notes  representing  the
portion  of their  capital  contribution  that has not  been  paid in cash.  The
Company borrows against the notes delivered by limited partners to generate cash

                                   29

<PAGE>

when needed, including to pursue its Development Plan and to repay debt.

     The Company  anticipates that the proceeds of the Company's  initial public
offering,  funds generated by its business operations and construction  mortgage
financing  will  provide  sufficient  funds to pursue its  Development  Plan (as
described  above) for at least six months at the projected rate of  development.
The capital  markets have generally been  unaccessible  to the Company and other
assisted  living  companies  for the purpose of raising  additional  funds.  The
Company is  exploring  additional  sources of capital.  Due to the fact that the
Company anticipates  utilizing that portion of the capital raised in its initial
public  offering and earmarked for new  development  within the next six months,
the Company has scaled back the projected  number of Development  Communities it
expects  to begin  construction  on over the next two  years.  The  Company  may
increase the projected rate of  construction  of Development  Communities in the
future if it is able to secure new  sources of capital.  The Company  intends to
use the proceeds of (i)  anticipated  joint venture  arrangements of Development
Communities,  (ii)  refinancings or  sale-leasebacks  of stabilized  Development
Communities  at  higher  principal   amounts  than  the  original   construction
financing, (iii) additional long-term leases or similar forms of financing which
require  the  investment  of little or no  capital  on the part of the  Company,
and/or (iv) funds which may be raised  through the  issuance of  securities,  to
continue  with its  Development  Plan for more  than the next six  months at its
projected rate of development. There can be no assurance that funds generated by
these  potential  sources  will be  available  or  sufficient  to  complete  the
Company's  Development  Plan. In addition,  there are a number of  circumstances
beyond the  Company's  control and which the  Company  cannot  predict  that may
result in the Company's  financial resources being inadequate to meet its needs.
A lack of  available  funds may  require  the  Company  to delay,  scale back or
eliminate some of the Development Communities that are currently contemplated in
its Development Plan.

     The first new Development  Communities  developed pursuant to the Company's
Development  Plan are in Texas.  The Company  has  completed  construction  with
mortgage financing and opened four Development Communities in Texas. The Company
has  commenced   construction  with  mortgage  financing  on  three  Development
Communities in Texas. The Company has acquired a site in Jackson, Tennessee, has
options to acquire  sites in  Montgomery,  Alabama,  Knoxville,  Tennessee,  and
Evansville, Indiana, and is actively negotiating to obtain control of additional
sites in the  Southeast  and Midwest.  The Company is  negotiating  with several
lenders to obtain financing to develop these sites. The Company anticipates that
most of the  construction  mortgage loans it obtains to finance the  development
and lease-up costs of new Development  Communities  will contain terms where the
lender will fund up to 80% of such costs, requiring the Company to contribute at
least 20% of such costs. The Company has entered into joint venture arrangements
with a  third  party  pursuant  to  which  it has  sold  50%  interests  in four
Development  Communities  located in Texas.  The  Company  intends to enter into
similar joint venture arrangements with regard to future Development Communities
it develops with mortgage financing.

     The Company has, and may in the future,  utilize  long-term lease financing
arrangements to develop and operate new Development Communities. The Company has
obtained  financing of $37.7 million from  Capstone for 100% of the  development


                                       30

<PAGE>

cost of four  Development  Communities  that are being  operated  by the Company
pursuant to long-term leases with Capstone.


STOCK BUYBACK

     On March 22,  1999,  the  Board of  Directors  authorized  the  Company  to
purchase up to 300,000 shares of the Company's  common stock. As of September 7,
1999, the Company had purchased  254,400 shares at an average price of $5.63 per
share.


YEAR 2000 UPDATE

     Year 2000  Overview - The Year 2000  issue is the  result of many  computer
systems and non-information technology systems which rely upon embedded computer
technology using only the last two digits to refer to a year and therefore being
unable to distinguish  between the years 1900 and 2000. If not  corrected,  many
computer  applications  that are date sensitive  could fail or create  erroneous
results.  As part of the process of upgrading its internal computer hardware and
software and in anticipation of the Year 2000 issue, the Company began to audit,
inventory,  modify and  replace  its  mission  critical  software  and  hardware
(including personal  computers,  spread sheets, and word processing) in its Fort
Lee, New Jersey and Boca Raton,  Florida  corporate  offices in 1997 ("Year 2000
Project").  During 1998, the Company's Year 2000 Project was extended to include
software and hardware located at the Syndicated  Communities and the Development
Communities,  "embedded technology" (such as telephones,  fax machines,  copiers
and postage machines),  property and corporate facilities (such as security/fire
systems,  emergency  call  systems,  elevators,  and HVAC  systems) and business
relationships  with  governmental  agencies,  utilities and material third party
vendors, and service providers.

     The Company has separate  computer hardware and software systems at each of
its Fort Lee,  New Jersey and Boca Raton,  Florida  offices.  Each office has an
intra-office  network.  None  of  the  Syndicated   Communities  or  Development
Communities  are part of a computer  network.  The Company is using a multi-step
approach  in  conducting  its Year 2000  Project.  These  steps are:  inventory,
assessment,  remediation and testing, and contingency planning.  The first step,
an inventory of all systems and devices with  potential  Year 2000  problems has
been completed.  The next step, an assessment of such inventory to determine the
state of Year 2000  readiness  for material  systems and devices,  has also been
completed  for the  Company's  two  offices  and it has  been  completed  at the
majority  of  the  Syndicated  Communities  and  Development  Communities.   The
remediation and testing of the Company's  software and hardware has already been
completed at the Company's two offices.  The Company has updated or replaced the
following  financial and accounting  systems with Year 2000  compliant  systems:
accounting  servers and related  hardware,  accounts payable  systems,  accounts
receivable  systems,  general  ledgers,  cash  management  programs  and payroll
systems.  In addition,  the Company has updated its construction server and data
base as well as the network  software  located in the  Company's two offices and
replaced substantially all of the desk-top personal computers located therein.


                                    31

<PAGE>

     However, even if the Company is successful in becoming Year 2000 compliant,
the Company remains at risk from Year 2000 failures caused by key third parties.
The Company has therefore initiated efforts with key third parties to assess and
wherever possible remediate Year 2000 issues. In most cases, the Company will be
relying  upon  statements  from such  entities as to the Year 2000  readiness of
their systems and will not attempt any  independent  verification.  To date, the
Company has not received  sufficient  information from such entities to complete
its assessment of their year 2000  compliance.  In addition,  the Company cannot
predict the outcome of other companies' remediation efforts.

     Year 2000 Costs - The total cost  associated  with the Year 2000 Project to
become Year 2000  compliant  is not  expected  to be  material to the  Company's
financial  position.  The  Company  currently  plans to  complete  the Year 2000
Project by September 30, 1999. The cost of the Company's total Year 2000 Project
is based on presently  available  information.  The Company does not  separately
track the  internal  costs  incurred for the Year 2000  Project.  Such costs are
principally  the related payroll costs for its  information  systems group.  The
total  remaining  cost of the year 2000 Project is  estimated  at  approximately
$25,000.  Substantially  all of this  $25,000  is related to the cost to replace
software and computers.  To date,  the Company  incurred  approximately  $40,000
related to the Year 2000 Project.  Substantially  all of this $40,000 is related
to the cost to replace software and computers.  The costs of the project and the
date on which the Company  plans to  complete  the Year 2000  modifications  are
based on management's  best  estimates,  which were derived  utilizing  numerous
assumptions  of future events  including the continued  availability  of certain
resources, third parties' Year 2000 preparedness and other factors.

     Risks - The failure to correct a material Year 2000 problem could result in
an  interruption  in, or a failure of,  certain  normal  business  activities or
operations.  The Company believes that all material Year 2000 problems which are
within its control were corrected by August 31, 1999 and therefore such problems
are not anticipated to have a material adverse affect on the Company's financial
position and results of operations.  Even if the Company successfully remediates
its Year 2000 issues, it can be materially and adversely affected by failures of
third parties to remediate their own Year 2000 issues. The Company believes that
the most  reasonably  likely worst case scenario is the loss of utility  service
(telecommunications  and power) at the Company's  corporate offices,  and all or
some of the senior living  communities it operates.  Based upon procedures which
are currently in place and the  contingency  plans which are being  prepared and
anticipated  to be put in  place,  such a  scenario  is not  expected  to have a
material  adverse  affect on the  Company's  financial  position  and results of
operations.

     Contingency  Plans - Contingency  plans are  anticipated  to be prepared so
that the Company's  critical  business  processes can be expected to continue to
function  on  January  1, 2000 and  beyond.  Such  plans are  anticipated  to be
developed by  September  30,  1999.  These plans will  attempt to mitigate  both
internal  risks as well as potential  risks due to business  relationships  with
third parties.


                                    32

<PAGE>


NEW ACCOUNTING PRONOUNCEMENTS

     In June of  1998,  the FASB  issued  Statement  No.  133,  "Accounting  for
Derivative  Instruments  and Hedging  Activities."  This  statement  establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts,  and for hedging activities.
It is effective for all fiscal quarters of fiscal years beginning after June 15,
2000. The Company's use of derivative instruments has consisted of treasury bill
locks related to two specific  mortgage debt  financings.  While the Company has
not  completed  its  analysis of  Statement  No. 133 and has not made a decision
regarding the timing of adoption,  it does not believe that adoption will have a
material effect on its financial position and results of operations based on its
current use of derivative instruments.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
         MARKET RISK

     For a discussion of market risk  sensitive  instruments,  see the Company's
Form  10-K for the  fiscal  year  ended  January  31,  1999.  There  has been no
subsequent material change to the Company's exposure to market risk.



                                       33

<PAGE>

                          PART II - OTHER INFORMATION.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     The  effective  date of the  registration  statements  (Nos.  333-05955 and
333-43331) for the Company's  initial public offering of its common stock,  $.01
par value,  was March 13, 1998.  The offering  commenced on March 16, 1998.  The
managing underwriter of the offering was Royce Investment Group, Inc. ("Royce").
Pursuant to the offering, the Company sold to the public 2,800,000 shares of its
common  stock at an initial  offering  price of $9.50 per share.  The  aggregate
price of the offering  registered by the Company was $26.6 million. On April 29,
1998,  pursuant to an over-allotment  option granted to the  underwriters,  John
Luciani  and Bernard M. Rodin (the  "Selling  Shareholders")  each sold  173,030
shares  of the  Company's  common  stock to the  public  at a price of $9.50 per
share.  The aggregate price of the shares offered by and registered on behalf of
the Selling Shareholders was $3.3 million.  Under the terms of the offering, the
Company  incurred  underwriting  discounts  of $1.6  million,  and  the  Selling
Shareholders incurred aggregate  underwriting discounts of $197,250. The Company
incurred  the  following  expenses  in  connection  with  the  offering:  (i)  a
non-accountable  expense allowance paid to Royce in the amount of $798,000, (ii)
a  consulting  fee paid to Royce in the  amount of  $266,000,  and  (iii)  other
expenses related to the offering in the amount of $1.5 million.

     The net proceeds that the Company received as a result of the offering were
$22.3 million. As of July 31, 1999, the Company's net proceeds have been used as
follows:  $11.5  million has been used for the  purchase of land and towards the
construction  of plant,  building and  facilities and $3.0 million has been used
for working  capital and the remainder has been used to purchase  treasury bills
pending application of the funds.


ITEM 5.  OTHER.

     Since June 16, 1999,  George  Batchelor is the beneficial  owner of 6.8% of
Grand Court's common stock.  Since the beginning of Fiscal 1996 and through July
31, 1999, the following  transactions  occurred  between Mr. Batchelor and Grand
Court:  (i) Grand Court borrowed $58.8 million (at stated interest rates ranging
from 12% to 15%) from Mr.  Batchelor,  and repaid  $42.8  million  of  principal
amounts of loans and paid $15.4  million of interest  and other loan fees to Mr.
Batchelor, (ii) Grand Court sold to Mr. Batchelor controlling interests in eight
Multi-Family  Owning  Partnerships  for  an  aggregate  consideration  of  $12.0
million, of which $5.0 million was in cash and the remaining $7.0 million was in
the form of a note on which Grand Court has received  principal  and interest in
the amount of  $393,839,  (iii)  Grand  Court  entered  into four joint  venture
arrangements  regarding  four  Development  Communities  in  which it sold a 50%
interest in each of the four  Development  Communities  to Mr.  Batchelor for an
aggregate  consideration  of $20.0  million,  and (iv)  Grand  Court sold to Mr.
Batchelor   investments   in   Multi-Family   Syndications   for  an   aggregate
consideration of $239,425.

                                      34

<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)   Exhibits

               Exhibit Number     Description of Exhibit
               --------------     ----------------------
               4.1                Indenture, dated as of June 1, 1999,
                                  among the Company and The Bank of
                                  New York (the "Series B Indenture").
               4.1(a)             Officer's Certificate, dated as of June 1,
                                  1999, under Sections 102, 201 and 301
                                  of the Series B Indenture, with form of
                                  Note attached.
               21                 List of subsidiaries.
               27                 Financial Data Schedule.


         (b)   Reports on Form 8-K
               None.
                                     35


<PAGE>

                                    SIGNATURE


     Pursuant to the  requirements  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.


                                                GRAND COURT LIFESTYLES, INC.
                                                (Registrant)



                                                /s/ Bernard M. Rodin
                                                --------------------
                                                Bernard M. Rodin
                                                President
                                                and Principal Financial Officer



Dated: September 14,  1999


                                      36


<PAGE>

                                  EXHIBIT INDEX
                                  -------------


4.1            Indenture,  dated as of June 1, 1999,  among the  Company and The
               Bank of New York (the "Series B Indenture").

4.1(a)         Officer's  Certificate,  dated as of June 1, 1999, under Sections
               102,  201 and 301 of the  Series B  Indenture,  with form of Note
               attached.

21             List of subsidiaries.

27             Financial Data Schedule.