APPLE HOMES CORP INC
10-12G, 1999-07-16
MOBILE HOME DEALERS
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                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549



                                     FORM 10

                   GENERAL FORM FOR REGISTRATION OF SECURITIES

     Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934


                             Apple Homes Corporation
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)


         Delaware                                             13-3525328
         --------                                             ----------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                            Identification No.)

         124 North Belair Road
         Evans Georgia                                         30809
 --------------------------------------                       --------
(Address of principal executive offices                      (Zip Code)

Registrant's telephone number, including area code  706-650-2015

Securities to be registered pursuant to Section 12(b) of the Act

                                      None

Securities to be registered pursuant to Section 12(g) of the Act


                          Common Stock, $.002 Par Value



<PAGE>

Item 1.  Business

General Information

     Apple Homes Corporation (the "Company") is a retailer of factory built
manufactured homes, known in the industry as manufactured housing. It presently
operates 12 retail sales locations-four in Augusta, Georgia, two in Thomson,
Georgia, and one each in Wrens, Washington, Statesboro and Waynesboro, Georgia
and Aiken and Anderson, South Carolina. It also operates a reconditioning and
used sales lot in Augusta, this lot houses its Mobile Air Systems subsidiary
offering air conditioning sales and service to manufactured home owners. All of
the Company's retail sales locations and other mobile home operations use the
trade name "Apple Homes".

     The Company presently purchases homes for resale from six manufacturers
located in the southeastern United States. Purchases are financed through
wholesale floor plan financing lines totaling $10,275,000 provided by three
major financial institutions and three local banks. To promote retail sales and
generate additional fee income, the Company assists its customers in finding
mortgage financing for the purchase of homes and also places homeowners
insurance for home buyers.

     The Company is also involved in development and sale of two adjoining real
estate subdivisions in Richmond County, Georgia. The sites, known as Mayfair
Acres and The Timbers, consist of 47 developed lots, of which seven lots remain
available for sale, and 10 rental homes owned by the Company. The Company also
owns 6.3 acres of undeveloped land in the area which it is presently considering
developing by installing roads and utilities and obtaining the necessary zoning
approval. The Company believes that the property may be subdivided into
approximately 40 lots for sale to retail purchasers of its manufactured homes.

     The Company was organized as a Delaware corporation on April 17, 1989 under
the name PLAM Properties, Inc. It changed its name to Mayfair Homes Corporation
in 1993 and again to Apple Homes Corporation in 1997. It presently operates
three of its retail sales centers and its used sales lot under its own name and
the remaining nine retail sales centers through six wholly or partially owned
subsidiaries: Augusta Housing Center, Inc., which is 100% owned and operates one
center; Big Daddy's Mobile Homes, Inc., 80% owned and operating two centers;
Evans-Lanier, Inc., 80% owned and operating two centers; Apple Homes, Inc., 100%
owned and operating one center; J.C. Homes, Inc., 80% owned and operating one
center; and Tim Phillips Homes, Inc., 100% owned and operating two centers.


                                      (2)
<PAGE>


Industry Overview

     Manufactured homes are complete single family residences built in a factory
and transported to the site on which they are to be located. These homes consist
of two types: manufactured homes, which are constructed on a chassis equipped
with wheels and are transported by tow trucks to their destination; and modular
homes, which are not equipped with a chassis and are transported on flat bed
trailers. Substantially all of the Company's sales are of manufactured homes.
Manufactured homes offer most of the amenities of and are generally built with
the same materials as site-built homes. They are produced in sections, also
referred to as "floors;" finished homes may consist of one or more sections.

     Because of their lower costs of construction when compared to costs of
site-built homes, manufactured homes have historically served as one of the most
affordable alternatives for the home buyer. According to statistics compiled by
the Georgia Manufactured Housing Institute for 1998, the average cost per square
foot of a single-section manufactured home in the state of Georgia (where 84% of
the Company's sales originated in that year) averaged $23 for a manufactured
home, compared to an average cost of $55 per square foot for a site-built home
(in each case excluding land costs).

     Since they are relatively less expensive than traditional housing,
manufactured homes have been an attractive means for home buyers to overcome the
obstacle of large down payments and high monthly mortgage payments. According to
the Manufactured Housing Institute, industry wide domestic shipments accounted
for 29.6% of the overall new housing market in the United States during 1998.
The use of manufactured housing in the southeastern United States, in which the
Company's primary market area is located, is even greater than for the nation as
a whole. The Georgia Manufactured Housing Association has reported that the
State of Georgia alone has more than 30 plants manufacturing housing and over
1,000 manufactured home retail sales locations. During 1997, according to the
National Conference of States on Building Codes and Standards, the states of
Georgia and South Carolina (which now comprise the principal market area for the
Company) ranked third and fifth in manufactured home shipments, and Georgia was
the leading producer of manufactured homes, a ranking it has held since 1984.

     Notwithstanding the increase in demand in recent years, the manufactured
housing industry is cyclical and is affected by many of the same factors that
influence the housing industry generally, including inflation, interest rates,
availability of financing, regional economic and demographic conditions and

                                      (3)

<PAGE>

consumer confidence levels, as well as the affordability and availability of
alternative housing such as apartments, condominiums and conventional site-built
homes. Accordingly, there can be no assurance that demand will continue at
present levels or that the Company's plans of capitalizing upon it by expanding
the size of its retail sales operations will be successful.

     Sales of manufactured homes are typically conducted in retail sales centers
whose operators range from small proprietors to large regional or national
dealerships, many of whom manufacture their own retail products. Because of
economies of scale, the ability to obtain larger rebates and discounts from
manufacturers and better financing for inventory and customers, these large
retail dealerships have a distinct advantage over small single location
operators. The Company's goal is to move its operations toward the level of
these large dealership networks.

The Company's Retail Operations

     Commencing in 1992 with the acquisition of its first two retail sales
centers, the Company's sales operations have expanded substantially over the
past five years. Sales during this period, which are not necessarily indicative
of future performance by the Company, have been as follows:

<TABLE>
<CAPTION>
                                                    Year Ended March 31,
                                                    --------------------

                          1999        1998         1997       1996       1995           1994
                          ----        ----         ----       ----       ----           ----

<S>             <C>       <C>                      <C>        <C>        <C>            <C>
Home Units Sold (1)       792         639          399        278        195            112

Retail Sales               12           9            6          3          3              2
 Centers Owned (2)

Weighted Average           66          71           67         93         65             56
 Unit Sales per
 Center
</TABLE>


                                      (4)

<PAGE>


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

(1)  Sales are divided between single-section and multi-section homes, with
     single-section homes accounting for 34% and multi-section homes accounting
     for 66% of sales in fiscal 1999. The range of home sale prices during
     fiscal 1999 was $16,500 for the least expensive single-section unit to
     $94,000 for the most expensive multi-section home, excluding land costs.

(2)  Based on number of centers open at least three months during the period.

The Company believes that these statistics are typical for retail sales
dealerships in its primary market area. In addition to sales of new manufactured
homes, the Company also deals in used homes acquired in trade-ins, which account
for approximately 4% of sales.

Sales are conducted through commissioned retail sales representatives located at
each sales center. Each sales center typically has onsite at any given time from
15 to 20 manufactured home units in a variety of models and price ranges,
although some sales centers carry a smaller inventory. All units are equipped
with basic appliances and some are furnished, and every unit is ready to move
onto the customer's site on purchase.

To enhance sales, the Company provides assistance to its customers in locating
purchase money financing. The Company has agreements with several large retail
finance companies including Green Point, Bergen, Bombardier, Deutsche Bank and
Dynex, under which it introduces its customers who require purchase money
financing. The Company receives fees for these services in the form of financial
participation. Revenues from this source were $136,460 for fiscal 1998 and
$430,000 for fiscal 1999.

As part of its placement of retail financing for its customers, applications and
supporting documentation required by the lenders are submitted by the Company.
In certain cases, if a lender discovers a loan has been made on the basis of an
erroneous application, it will look to the Company for recourse. This practice,
which is common in the industry, has resulted in contingent recourse liability
to the Company that, at March 31, 1999 amounted to $859,000. Industry statistics
and Company performance indicate that an average loss of 10-15% of this amount
can be expected if the Company has to repossess a home. The Company does not
believe that this contingent liabilty is significant to its operations or
financial condition, however, as it is in a position to relieve itself of this
liability in any given case by repossessing and reselling the home in question.

The Company also receives significant revenues from various commissions and
rebates. The sources of these revenues include the placement of homeowner's
insurance for American Modern Insurance Company, the placement of advertising
in-house (which commenced in fiscal 1999), rebates on freight contracts for the
delivery of its inventory, the sale of repossessed homes for lending
institutions, furniture sales and other miscellaneous items. Total commission
and rebate income was $107,000 for fiscal 1998 and $231,000 for fiscal 1999.

                                      (5)

<PAGE>


The Company's retail sales centers each consist of a tract of land ranging from
one to six acres on which 15 to 20 manufactured home units are displayed, and a
sales office. The land on which all centers are located is leased by the Company
with the exception of one lot in Thomson Georgia which it purchased in March
1999 for $275,000 paid by a purchase money mortgage, and one lot formerly
operated in Pelzer South Carolina which it purchased in September 1998 for a
price of $50,000. The sales offices on the lots are manufactured homes used for
that purpose. The Company owns or has financed 7 offices, rents 2 offices from
unrelated parties, rents 3 offices from minority shareholders and rents 3
offices from the Company President The Company also owns three tow trucks and
two escort vehicles to transport units sold to customer sites, as well as other
necessary equipment.

Each sales center has personnel available to transport each purchased home to
the customer's site and to install and make it fully operational at the site.
Some of these personnel are Company employees, while others are independent
contractors who supply their own transportation equipment. The equipment and
personnel used for these activities typically service more than one location,
thus reducing overall costs of installation and transportation. The Company
believes that by expanding its retail sales network to new locations, it will be
able to enhance its profitability per inventory unit by emphasizing integration
of these activities among these new and existing sales centers.

In addition to its retail sales activities, the Company went into the air
conditioning sales and service business in January 1999 with the purchase of
Mobile Air Systems, Inc.("MAS"). The subsidiary was purchased from Robert Steed
for a price of $257,500, of which $30,000 was paid in cash and the balance by
issuing the owner 130,000 shares of Company Common Stock at its then market
price of $1.75 per share. Gross revenues for MAS during calendar 1998 were
$595,500 and its profit for the year was $76,349. As of the date of its purchase
by the Company, MAS had a net worth per its books of $76,449.

Real Estate Development Activities

The Company's original business, commenced in 1989, involved a real estate
subdivision and development in the Augusta, Georgia area known as Mayfair Acres.
The first phase of this development, which consists of 11 acres, contains 29
developed lots, and the remaining 6.7 acres are not yet developed. The developed
lots were acquired by the Company in 1989 for $30,000 and were developed at a
cost of $160,000. The Company is presently marketing the remaining seven
developed lots on the site, four of which include a manufactured home installed


                                      (6)

<PAGE>

on the lot. It is considering the development of the remaining 6.7 acres in
Mayfair Acres into a subdivision with approximately 40 lots for sale to
prospective retail purchasers.

In addition to its Mayfair Acres subdivision, the Company purchased 18 homes in
The Timbers, a subdivision located near Mayfair Acres. Nine of the homes were
purchased from Robert S. Wilson, a Company director and promoter, and Ted C.
Smith, a stockholder of the Company, for a purchase price of $200,000
(approximately the cost of these housing units to the sellers). The other nine
houses were acquired from LEAP Associates, a partnership of which Mr. Wilson is
an owner, for 70,500 shares of Common Stock. Ten of the 18 houses are rented and
eight have been sold under installment sales contracts for prices ranging from
$30,000 to $42,000.

In May 1999, the Company sold installment contracts on 18 of the homes in
Mayfair Acres and The Timbers for $320,000, leaving it with a total of 7 homes
and/or lots and the undeveloped acreage owned in the two sites.

Suppliers

The Company currently purchases manufactured homes from six manufacturers, all
located in the Southeastern United States. Two of these suppliers, General
Housing of Waycross, Georgia and Bellcrest Homes of Millen, Georgia accounted
for over 75% of inventory purchased in fiscal 1999. Eight of the Company's
retail sales centers sell General Housing homes exclusively, and the inventory
costs at those centers are borne by that supplier. The Company purchases
inventory units on a deal-by-deal basis and has one year contracts with each
supplier, the terms of which are reviewed annually. While the Company does not
anticipate any problems in continued supply of product from these suppliers and
believes that it can replace any of them by substituting the products of other
manufacturers located in the Southeastern region, the loss of any of its major
suppliers may have a material adverse effect on the Company's operations. Each
supplier offers incentive payments to the Company based upon its volume of
purchases. During fiscal 1999 these incentives amounted to an average of $2,150
per unit.

Dealer Financing

The Company finances purchases of manufactured housing units through "floor
plan" financing. Under these financing arrangements, the Company borrows the
purchase price for each manufactured home it acquires from a bank or other

                                      (7)

<PAGE>

lending institution pursuant to a master contract, each loan being secured by
the unit purchased with its proceeds. When the unit is sold to a retail
customer, the Company must pay off the loan and obtain a release of the lender's
security interest, in order to give the buyer free and clear title to the
property.

The Company now has floor plan financing contracts with six lenders, three of
whom are major financial institutions and three are local banks. The Company's
floor plan financing lines now total $10.275 million at interest rates of 1% to
2% over prime. The lines are reviewed and extended on an annual basis. E. Samuel
Evans, the Company's President, has personally guaranteed all of this financing
for which he receives an annual fee from the Company.

The Company believes that its lines of credit are sufficient to finance
purchases of inventory in its existing locations for the foreseeable future.
However, if its retail operations continue to increase, it may have to increase
them, as each retail sales center typically requires up to $500,000 to finance
inventory units on hand. The Company believes that new floor plan financing will
be available as needed to cover the requirements for its proposed new sales
centers, but there can be no assurance that this availability will continue to
exist or that the present interest rates and other credit terms it now enjoys
(which are subject to changes in lending practices of its present lenders and
other general economic conditions) will continue to be available. The Company
has no present commitments for any expanded dealer financing.

Competition

The retail manufactured home sales business is highly competitive, as capital
requirements for entry are relatively small. Competition is based primarily on
price, reputation for service and quality, depth of field inventory, sales
promotion and merchandising and terms and availability of retail customer
financing. In its existing sales areas (the 150 mile radius around Augusta,
Georgia) there are many manufactured home retail sales centers with which the
Company competes. The Company generally expects that any areas in which it opens
new retail sales centers will have similar numbers of competitors in the market
place. While the Company is larger than most of its competitors, at least one
competitor in the Augusta, Georgia area is substantially larger than the
Company, now operating over 30 retail sales locations. In addition, many

                                      (8)

<PAGE>

national and regional manufactured home producers operate their own retail sales
locations throughout the country. At least two of these producers are currently
operating in the Company's primary marketing areas and other companies (which
because of their size and integrated operations may offer better pricing and
terms of financing than the Company has available) may become competitors in the
future.

Government Regulation

There are a number of federal, state and local laws and regulations affecting
the manufacture, sale and financing of manufactured homes. Manufacturers are
governed by federal laws including the Department of Housing and Urban
Development's comprehensive national construction standards, affecting such
items as structural integrity, fire, safety, thermal protection and ventilation.
State and local building and zoning codes may also affect the quality, type and
number of manufactured homes the Company is permitted to sell within any given
geographic area. The Company believes that the homes it is currently selling
meet all of these federal, state and local laws and regulations.

The sale and financing of manufactured homes are also the subject of extensive
federal and local regulation. These include Federal Trade Commission rules
involving unfair credit and collection practices, Federal Reserve rules
requiring written disclosure of financing terms and information used as a basis
for denial of credit, and laws prohibiting discrimination in sales and lending
practices. In addition, the Company's activities as a mortgage broker and
insurance agent require licenses from state agencies which also govern allowable
charges and sales practices. The Company believes that it is currently in
compliance with all such governmental regulations.

Federal, state and local legislation and regulations are proposed from time to
time that, if enacted, could significantly affect the regulatory climate for
sales and financing of manufactured homes. It is not possible at this time to
predict what if any changes such legislation and regulations may have upon the
Company's business in the future.

Employees

At March 31, 1999, the Company had 94 full time employees, including 39 in
sales, 13 in transportation, installation and repair, and 42 in general or
administrative positions, as well as 110 independent contractors who are used
for site preparation and installation of homes. The Company has no collective
bargaining agreement with its employees and has not experienced any work
stoppages as a result of labor disputes. It considers that its relations with
its employees are good. All employees with the exception of sales personnel are
salaried; sales employees are paid by commission based upon their production.

                                      (9)

<PAGE>

Item 2. Financial Information

A. Summary Financial and Operating Data

Summary operating and financial data for the Company's five fiscal years ended
March 31,1995 through March 31, 1999 and balance sheets as of those dates are as
follows:

<TABLE>
<CAPTION>

                                                                        YEAR ENDED MARCH 31
                                           1995             1996             1997           1998               1999
STMT OF OPERATIONS                     ------------------------------------------------------------------------------
- - ------------------
<S>                                     <C>               <C>             <C>             <C>              <C>
NET SALES (REVENUES)                  $ 6,768,965       $ 8,442,228     $ 15,549,376    $ 25,615,535     $ 33,776,250
INCOME (LOSS) FROM OPERATIONS             244,334           179,296          116,538          34,962         (247,196)
OTHER INCOME (LOSS)                      (137,835)         (274,399)        (518,346)         37,785          434,228
NET INCOME (LOSS)                         106,499           (93,434)        (439,526)        (51,531)         104,304
INCOME (LOSS) PER COMMON SHARE               0.08             (0.10)           (0.40)          (0.03)            0.05
WEIGHTED AVG SHARES O/S                 1,269,087           946,264        1,109,669       1,491,423        1,925,012

OPERATING DATA
- - --------------
HOMES SOLD                                    195               278              399             639              792
NUMBER OF RETAIL CENTERS                        3                 3                6               9               12
WEIGHTED AVG UNITS SOLD / CTR                  65                93               67              71               66

BALANCE SHEET DATA
- - ------------------
WORKING CAPITAL
 (CURR ASSETS LESS CURR LIAB)         $  (103,648)      $   (36,090)     $  (143,743)     $  640,812     $  1,442,991
TOTAL ASSETS                            3,804,957         3,442,001        6,628,919       8,331,753       12,906,584
LONG TERM OBLIGATIONS                     510,769           528,485        1,085,323         491,508        1,054,316
SHAREHOLDERS' EQUITY                      568,923           723,296          333,427       1,609,056        2,291,110
</TABLE>


B. Management's Discussion and Analysis of Financial Condition and Results of
   Operations

The following discussion and analysis should be read in conjunction with the
Company's  consolidated  financial  statements  and the notes  thereto  included
elsewhere in this  Memorandum.  The  discussions  of results,  causes and trends
should not be construed to imply any conclusion that such results or trends will
necessarily continue in the future.

                                      (10)

<PAGE>

Results of Operations -- Fiscal Years ended March 31, 1997, March 31, 1998
and March 31, 1999

The following table shows the components of the results of operations for fiscal
years 1997, 1998 and 1999 in amounts and percentage of revenues (000 omitted):

<TABLE>
<CAPTION>

                                                             YEAR ENDED MARCH 31
DESCRIPTION                               1997                        1998                         1999
- - -------------------------------------------------------------------------------------------------------------
<S>                                <C>           <C>          <C>            <C>          <C>           <C>
Sales                              15,549        100.0%       25,616         100.0%       33,776        100.0%
Cost of Sales                      12,327         79.3%       20,544          80.2%       27,849         82.5%
                                   --------------------------------------------------------------------------
Gross Profit                        3,222         20.7%        5,072          19.8%        5,927         17.5%


Operating Expenses:
Compensation                        1,416          9.2%        2,355           9.2%        2,949          8.7%
Advertising                           194          1.2%          353           1.4%          639          1.9%
Occupancy and vehicle                 240          1.6%          358           1.4%          269          0.8%
Depreciation and amortization          38          0.2%           70           0.3%           98          0.3%
Insurance                             101          0.6%          196           0.8%          223          0.7%
Professional fees                     147          1.0%          219           0.9%          126          0.4%
Taxes and licenses                    141          0.9%          296           1.2%          301          0.9%
Miscellaneous                         829          5.3%        1,190           4.6%        1,569          4.6%
                                   --------------------------------------------------------------------------
Total Operating Expenses            3,106         20.0%        5,037          19.7%        6,174         18.2%


Other Income (Expense):
Commissions earned                     37          0.2%          108           0.5%          231          0.6%
Rental income                                                                                 92          0.3%
Interest income                        49          0.3%           27           0.1%           88          0.3%
Other income (expense)                 (5)         0.0%          380           1.5%           18          0.1%
Finance participation                                            137           0.5%          430          1.3%
Interest expense                     (599)        (3.8%)        (614)         (2.4%)        (425)       (1.3%)
                                   --------------------------------------------------------------------------
Total Other Income (Expense)         (518)        (3.3%)          38           0.2%          434         1.3%


Income (Loss) Before Income Tax
  Provision and Minority Interest    (402)        (2.6%)          73           0.3%          187          0.5%

Income tax provision                   33          0.2%          116           0.4%          (73)        (0.2%)
Minority interest in net income       (71)        (0.5%)        (240)         (0.9%)         (10)        (0.0%)
                                   ---------------------------------------------------------------------------

Net Income                           (440)        (2.9%)         (51)         (0.2%)          104         0.3%
                                   ===========================================================================
</TABLE>



Comparison of Fiscal 1999 to Fiscal 1998. Sales in 1999 rose by approximately $8
million, or 32%, on an increase of 153 units sold, or 24%, primarily due to a
net increase of three sales lots in 1999. However, these greater sales did not
result in an increase in gross profit margin, which decreased as a percentage of
sales to 17.5% in 1999 from 19.8% in 1998. This decrease was due primarily to a
more competitive market which demands a decreased sales price per unit. Another
factor is the additional costs to implement governmental restrictions related to
the set-up and placement of homes. The Company is using inventory management
methods in an effort to address these conditions in fiscal 2000. Despite this
adverse condition, net profit for 1999 increased by $155,000 in 1999, or over
300%, due to two primary factors which offset the decrease in gross margin.
These were a reduction in operating costs from 19.7% of sales in 1998 to 18.2%
of sales in 1999 and an increase in other income from .1% of sales in 1998 to
1.2% of sales in 1999. These resulted from the following factors: (i) spreading
the operating costs over a greater sales base: (ii) an increase in commission,
rental, interest and finance participation income; and (iii) a large decrease in
interest expense due to the assumption of floor plan expense by manufacturers at
a number of retail sales centers featuring their products exclusively. Minority




                                      (11)

<PAGE>

Interest in Net Income decreased from $240,392 in Fiscal 1998 to $9,989 in
Fiscal 1999. This is due to an agreement between the Company and the minority
shareholders to pay bonuses based on performance. As a result of this new plan,
the Company paid $193,460 to the minority shareholders, which was recorded as
compensation. The effect of this was to reduce the profits in the minority
ownership subsidiaries, resulting in a reduction in the amount recorded as
Minority Interest in Net Income of Consolidated Subsidiaries.

Comparison of Fiscal 1998 to Fiscal 1997. Sales rose by approximately $10
million, or 65%, in 1998 on increased unit sales of 260, or 60%. This increase
was primarily attributable to a net increase of three sales lots in that year.
Gross margin dropped in 1998 by .9% from 20.7% in 1997 to 19.8% in 1998 due to
the same factors adversely affecting gross margin in 1999, although the effect
of these conditions was not as severe as in the latter year. The net loss was
reduced from $440,000 in 1997 to $51,000 in 1998 due almost entirely to a very
substantial increase in commission, interest and finance participation income
from $86,000 in 1997 to $642,000 in 1998. This increase resulted from better
terms the Company was able to negotiate with its suppliers because of the very
large increase in Company purchases from them.

Liquidity and Capital Resources

Since its formation in 1990, the Company has funded its operations and capital
expenditures primarily through contributions from its founders and private
placements of its equity securities and debt, including convertible notes. In
the most recent placements of securities made by the Company (i) in 1997, it
received a total of $ 485,000 in capital contributions through the conversion of
notes originally sold in 1996 and the sale of 200,000 shares of common stock in
a private offering, and (ii) in fiscal 1999 it received $202,500 from the sale
of convertible debentures and $100,000 from the sale of warrants in another
private placement.

As an addition source of capital, the Company recently sold to a local finance
company for $565,204 a total of 34 retail installment sales contracts held
received from the sale of lots and homes.

The Company has used these proceeds to open and supply inventory to new retail
locations and to improve its working capital position. The Company believes that
the proceeds from these placements, together with cash flow from its operations
and its present lines of floor plan financing, should provide it with sufficient
liquidity to conduct operations and maintain its expansion of sales for the next
several months. There can be no assurance that such will be the case, however,
particularly if general economic conditions result in a downturn in the sale of
housing in the Augusta Georgia market.

                                      (12)

<PAGE>


Forward Looking Statements

The discussion contained in this Section and elsewhere in this Memorandum
contain certain "forward looking statements" (within the meaning of that term as
defined in the Securities Act and the Exchange Act), about the Company's future
operations. These statements include, among other things, projections of
revenues from existing and future retail sales centers, the Company's plans to
open new sales centers and to obtain the needed floor plan financing for them,
and the Company's anticipation that this expansion will result in a substantial
increase in profitability. The likelihood of the Company's success in
undertaking these activities and achieving these results is based upon a number
of assumptions and estimates which are inherently subject to significant
uncertainties and contingencies, many of which are beyond the control of the
Company and which reflect business conditions that are subject to change. These
include adverse changes in the financial markets, which may in turn adversely
affect the Company's ability to borrow funds and the price at which those funds
will be available, changes in the mortgage market, which may adversely affect
the ability of the Company's customers to finance the purchase of new homes, and
in economic conditions in those areas in which the Company's retail sales
centers are located. As a result of these uncertainties, actual results may vary
substantially from these forward looking statements contained herein and
prospective investors should not place undue reliance on any of them.

C. Qualitative and Quantitative Disclosures about Market Risk.

The Company does not hold and has not held any derivative securities such as
options or other market risk sensitive instruments and, accordingly, is not
presently subject to the risks of investment in such vehicles.


Item 3. Properties

The Company's principal offices are located in building at 124 North Belair
Road, Evans, Georgia which it acquired in January 1999 for a price of $285,000.
The property has 3,340 square feet of modern office space and is adequate for
the Company's requirements for the foreseeable future. It was financed by a
$230,000 mortgage loan from Suntrust Bank personally guaranteed by E. Samuel
Evans, the Company's President and Robert S. Wilson, one of its directors and
original promoters. The mortgage is due in monthly installments of $2,115,
including interest at 7.25% per annum, with the balance of the principal due on
December 5, 2001.

                                      (13)

<PAGE>


The Company holds a continuing interest in the Mayfair Acres and Timbers
properties consisting of seven lots for sale (four with mobile homes installed
on them), 10 rental units and 6.7 acres of undeveloped land.

Eleven of the Company's retail mobile home sales lots, consisting of
approximately two to five acres each, are leased for a total rental of $260,852
per year. One lot at Thomson Georgia, consisting of 1.5 acres, was purchased by
the Company in March 1999 for a price of $275,000, payable in monthly
installments of $2,663 each, or the same amount the Company was formerly paying
as rent for the property to its owner. The Company also owns a lot in Pelzer
South Carolina formerly used a sales center. The property was acquired in 1998
for a price of $50,000.

The sales offices on the lots are manufactured homes used for that purpose.
Three of these offices are leased from E. Samuel Evans, the Company's president
and three are leased from other shareholders. The Company owns three tow trucks
and two escort vehicles to transport units sold to customer sites, as well as
five service trucks and other necessary sales and office equipment. Total book
value of these vehicles and equipment was $120,898 at March 31, 1999 against
outstanding financing owing by the Company of $114,962.

Item 4. Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth information regarding the beneficial ownership of
the Company's Common Stock at June 1, 1999, of (i) each person who is known by
the Company to own beneficially more than five percent of its Common Stock, (ii)
each executive officer and director of the Company, and (iii) all officers and
directors of the Company as a group. The Company has been advised by each
stockholder identified in the table that he possesses all voting and investment
power with respect to the stock beneficially owned by him.

                                      (14)

<PAGE>



Name, Address                         Shares                   Percentage of
and Affiliation                    Beneficially                 Outstanding
with Company                          Owned                       Shares
- - ---------------                    ------------                --------------

E. Samuel Evans,                    195,000(1)                     9.3%
President and Director
845 Vivian Court
Evans GA 30809

Robert S. Wilson,                   194,138(2)                     9.3%
Director(2)
4715 Lake Front Drive
Martinez, Georgia 30907

Richard Belz, Director                   -0-                       -0-
101 Fairchild Avenue
Plainview NY 11803

Laura Rollins, Chief                  3,000                        0.1%
Financial Officer,
Secretary and Treasurer
3690 Inverness Way
Martinez GA 30907

Bryce N. Batzer,                        -0-(3)                     -0-%
Director
2263 N.E. 26th Street
Lighthouse Point, FL
33064

All officers and                    392,138                       18.7%
directors as a group
(five persons)

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

(1)  Does not include 200,000 shares issuable on exercise of Class A Warrants
     owned by Mr. Evans.

(2)  Mr. Wilson resigned as Chairman of the Board of the Company as of June 30
     1999 but remains a director. This table does not include 51,000 shares held
     by Mr. Wilson's wife, 2,813 shares held by Stock Builders Corp., a
     corporation of which Mr. Wilson and members of his immediate family own
     41.67%, and 328,000 shares issuable upon exercise of Class A Warrants owned
     by him.

(3)  Does not include 128,672 shares held by trusts agreement for the benefit of
     members of his family, 33,000 shares issuable on conversion of $90,000 in
     Convertible Debentures and 50,000 shares issuable upon exercise of Class A
     Warrants issued to him as a director.


                                      (15)

<PAGE>



Item 5. Directors and Executive Officers

The directors and executive officers of the Company are:


Name                         Age                        Position
- - ----                         ---                        --------

E. Samuel Evans              50                         President, CEO and
                                                        Director

Robert S. Wilson             76                         Director

Bryce N. Batzer              78                         Director

Richard Belz                 43                         Director

Cynthia D. Holley            36                         Vice President-
                                                        Operations

Chester C. Helmick           57                         General Sales Director

Laura H. Rollins             43                         CFO, Secretary and
                                                        Treasurer


E. Samuel Evans has served as president and a director of the Company since
1992. Prior to that date his principal occupation was as president and owner of
Augusta Housing Center Inc. from its formation in 1982 until its sale to the
Company in 1992. Mr. Evans is a graduate of Augusta College with a degree in
business administration in 1971 and a graduate of Woodrow Wilson College of Law
in Atlanta, Georgia in 1979. He is licensed to practice law in the State of
Georgia.

Robert S. Wilson has been chairman of the board of the Company since its
founding in 1989. He has resigned as Chairman effective June 30. 1999. He served
as its president and chief executive officer until 1992 and as secretary and
treasurer until 1998. Prior to his founding of the Company, Mr. Wilson was
active for 34 years in the securities industry as an executive with S.D. Cohn &
Company, a retail broker/dealer in New York City from 1981 to 1984 and, prior to
that date, as a sales representative or wholesaler of mutual funds with several
other firms. From 1986 to 1989, he was self-employed as a real estate broker and
from 1984 to 1986, he was an employee of Lease/Purchase Corporation, a real
estate dealer and developer. Until 1999, he held a real estate sales license in
the State of New York and is a 1947 graduate of Cornell University.

Bryce N. Batzer has been a director of the Company since 1994. He is currently
the owner of Cedarbrook Development Company Inc., a Florida land and home
developer which he organized in 1987. He is also vice president of American
Marine Products Inc., a manufacturer of marine windows, boat windshields and
other marine products. Mr. Batzer was the president of Plastiline Inc., a
publicly held company, from 1955 through 1976, and until 1996 he served Florida
Coast Banks Inc. for over 25 years as a member of the executive committee,
chairman of the loan committee and chairman of the compensation committee. Mr.
Batzer was a founder and board member of the Broward Manufacturers Association

                                      (16)

<PAGE>

and a founder, director and chairman of the Broward Industrial Development
Board, both of which are instrumental in developing an industrial economic base
for Broward County, Florida. He is a graduate of Syracuse University, holding a
bachelor's degree in industrial engineering.

Laura H. Rollins joined the Company as Comptroller in August, 1998. She
previously worked for the Company's auditors, Serotta, Maddox, Evans & Co. for
one year and for C. C. McGregor & Co. of Columbia, South Carolina for the prior
two and one-half years. She is a certified public accountant licensed in South
Carolina and Georgia and a graduate of the University of North Carolina. She is
a member of the AICPA and the South Carolina and Georgia Societies of CPA's.

Richard Belz was elected a director of the Company in November 1998. He has been
a principal and officer of Redstone Securities, Inc. since 1989. He is a
licensed securities representative and certified public accountant.

Cynthia D. Holley has been an employee of the Company since October 1995 as
office manager and administrative assistant and was promoted to her present
position in April 1999. She is a graduate of Mercer University with a BBA in
marketing management and holds certificates as human relations specialist and
GMHA housing consultant.

Chester C. Helmick joined Augusta Housing Center, one of the Company's
subsidiaries, in 1984 as a housing consultant and has served the Company in
various managerial positions since its acquisition of that subsidiary. He was
elected to his present position with the Company in March 1999. Mr. Helmick is
retired from the United States Army in which he served for 20 years.

Mr. Wilson and Mr. Evans may be deemed promoters of the Company. They, members
of their families, and Mr. Batzer have been involved in several transactions
with the Company, described in "Certain Transactions".

Each director serves for a term of one year and is elected at the annual meeting
of shareholders. The Company's officers are appointed by its Directors and hold
office at their discretion.

                                      (17)

<PAGE>


Item 6. Executive Compensation

  The following table sets forth information  concerning total compensation paid
by the  Company  during  its last  three  fiscal  years to the  Company's  chief
executive officer and its officers and directors as a group:

                                   Year Ended
Name                         Position       March 31         Compensation (1)
- - ----                         --------      --------         ----------------

E. Samuel Evans              President       1999              $   110,332
                                             1998              $   105,741
                                             1997              $    94,259

All directors and officers                   1999              $   307,182
as a group (6 in number)                     1998              $   259,211
                                             1997              $   156,759
- - ----------------

(1)  This compensation consisted entirely of salary. It did not include
     automobile allowances in the amount of $18,000 paid to Mr. Evans in fiscal
     1998, the cost of health insurance benefits, or the guarantee fee paid
     annually to Mr. Evans for his personal guarantee of the Company's floor
     plan financing. See "Certain Relationships and Related Transactions".

In fiscal 1997, 1998 and 1999, the Company granted a total of 200,000 Class A
Warrants each to Messrs. Wilson and Evans. These grants were made in
consideration for services they rendered to the Company. The Warrants had no
significant value at the dates they were issued.

Mr. Batzer and Mr. Belz serve as directors for minimal cash compensation but are
reimbursed for out-of-pocket expenses in attending to the affairs of the
Company. Mr. Batzer has also been granted 50,000 Class A Warrants for his
services.

The Company has entered into an employment agreement terminating on March 31,
2000 with Mr. Evans calling for compensation of $96,000 per year plus bonuses to
be determined by the Board of Directors based upon profitability of the
Company's operations. The employment contract also contains a covenant not to
compete with the Company for a period of one year following termination of
employment.

Equity Incentive Plan
- - ---------------------

On April 26, 1996 the Company adopted an Equity Incentive Plan and reserved 1
million shares for issuance pursuant to options and awards granted under the
Plan. All full time employees are eligible for participation in the Plan,
including senior management and directors. All awards and options issued under
the Plan must be approved by a committee of the Board of Directors not including
members of senior management, which will fix the terms of the options and awards
granted. At this date no such awards or options remain in effect.

                                      (18)

<PAGE>


Item 7. Certain Relationships and Related Transactions

The Company and its subsidiaries have engaged in the following transactions with
officers and directors of the Company and members of their immediate families
since April 1, 1998:

1.   On May 24, 1999, the Company paid off a mortgage loan in the amount of
     $114,424 from McDuffie Bank & Trust Co. of Thomson, Georgia, the proceeds
     of which were used to repay a loan of $40,000 made to purchase the Mayfair
     Acres property and to pay for the development of the lots and site
     improvements on the property. This bank loan had been personally guaranteed
     by Messrs. Evans and Wilson, and in consideration for giving their personal
     guarantees, the Company had issued to each of them 20,000 shares of Common
     Stock in March 1994.

2.   Mr. Evans has personally guaranteed payment of the Company's obligations
     under its existing floor plan lines of credit. For these guarantees, the
     Company has paid him a fee which during fiscal 1999 amounted to $147,560.

3.   The Company employs Sheryl Evans, wife of Mr. Evans, as consultant in the
     decoration and furnishing of mobile homes it sells to its retail customers.
     During fiscal 1999, Mrs. Evans received $152,725 for her services to the
     Company in this capacity, and incurred approximately $24,000 in expenses
     for the purchase of materials used in Company displays.

4.   On April 28, 1999, the Company purchased two manufactured homes from Bryce
     Batzer, a director of the Company, for a total purchase price of $62,349,
     which was approximately his cost in the homes. On that day, Mr. Batzer used
     the proceeds from the sale to acquire a $65,000 convertible debenture of
     the Company. The remaining $2,651 was treated as a miscellaneous expense of
     the Company.

5.   The Company rents three mobile homes from E. Samuel Evans for use as sales
     offices on its lots in Augusta and Statesboro, Georgia and Anderson, South
     Carolina. Total rental for these homes is $33,446 per year.

6.   On October 1, 1998, the Company acquired Southern States Lenders, Inc. a
     local Augusta Georgia mortgage lender and servicer, for a price of $20,000.
     After coming to the conclusion that this acquisition would not serve the
     Company's best interests, in April, 1999 it distributed to its shareholders
     the shares it held in Southern States, and certain directors and officers
     of the Company, including Messrs. Evans and Wilson, acquired the remaining
     shares of that company. No transactions undertaken by Southern States have
     been recorded on the Company's books. The Company has recovered from
     Southern States its entire investment in that company and has no remaining
     connections with it.

The Company believes that these transactions with its officers and shareholders
have been and will be on terms no less favorable to the Company than those
available from unaffiliated parties.

                                      (19)

<PAGE>


Item 8. Legal Proceedings

The Company is currently a defendant in several lawsuits, none of which is
material to its operations or would, in the event of an adverse decision, be
materially adverse to its business.

Item 9. Market Price and Dividends on the Registrant's Common Equity and
Related Stockholder Matters

The Company's Common Stock have traded on the OTC Bulletin Board since May 11,
1998. The following table sets forth the high and low bid and asked prices for
both securities and the volume of trading on a quarterly basis since that date.

    Quarter Ended                   Bid                    Asked
    -------------                   ---                    -----

   June 30, 1998                3.00--9.12               4.00--9.62
   September 30, 1998           3.50--5.62               3.62--6.00
   December 31-1998             0.94--3.68               1.75--4.50
   March 31, 1999               1.75--3.25               1.75--4.00
   June 30 1999                 1.62--2.37               1.87--3.00

On June 30 1999 the Common Stock was quoted at 2.12 bid and 2.37 asked.

Item 10 Recent Sales of Unregistered Securities

Since April 1, 1996, the Company has issued shares of Common Stock, warrants to
purchase Common Stock and debentures convertible into Common Stock in the
following transactions. None of these securities was registered under the
Securities Act of 1933 on the basis of the exemptions stated below.

1.   In June 1996 the Company issued to 19 purchasers a total of $600,000 in
     debentures convertible at $2.00 per share into Common Stock; the purchasers
     also acquired for no additional consideration warrants to purchase 600,000
     shares of Common Stock for an exercise price of $6.50 per share. This
     issuance was made pursuant to the provisions of the Rules of Regulation D,
     including Rule 504,and was consequently exempt from registration.

2.   In June 1997 $481,500 of the foregoing debentures were converted into
     240,750 shares of Common Stock at the conversion price of $2.00 per share.
     This issuance was exempt from registration pursuant to Section 3(a)9 of the
     Act.

                                      (20)

<PAGE>


3.   During 1998 a total of $77,500 in debentures issued by the Company in a
     private offering in 1993 were converted into 62,000 shares of Common Stock
     in accordance with their terms. The issuance of these shares was also
     exempt from registration by reason of the provisions of Section 3(a)9.

4.   In December 1997 the Company issued to 12 purchasers a total of 201,172
     shares of Common Stock for a price of $5.00 per share, or a total of
     $1,005,860. As part of the transaction, the agent placing these shares was
     granted the right to purchase for a price of 10 cents per warrant 100,000
     warrants to purchase shares of Common Stock at $6.50 per share and issued
     75,000 shares of Common Stock. This transaction was conducted pursuant to
     Regulation D, including Rule 504, and was therefore exempt from
     registration under the Act.

5.   From January to April 1999, the Company issued to a total of eight
     investors, including Bryce Batzer, one of its directors, a total of
     $202,500 in debentures convertible into Common Stock at a price of $4.00
     per share. This issuance was conducted pursuant to the provisions of
     Regulation D, including Rule 506, and was thus exempt from registration
     under the Act. The debentures have been legended as "restricted
     securities", as that term is defined in Rule 144, and may not be
     transferred except in accordance with the provisions of that Rule.

6.   During fiscal 1999 the Company issued a total of 12,000 shares to two
     persons for the performance of internal financial reporting services and
     25,000 shares to a financial public relations firm for assistance in
     preparing press releases and reports to stockholders. These shares were
     issued as "restricted shares" under Section 4(2) of the Act and Rule 144,
     are legended as such and may not be sold or trasferred except in compliance
     with Rule 144.

Item 11. Description of Registrant's Securities to be Registered

Common Stock

The Company is authorized to issue 10,000,000 shares of Common Stock, $.002 par
value. At June 30, 1999, there were 2,091,539 shares of Common Stock issued and
outstanding, owned by 61 stockholders of record. Based on its inquiries with the
market makers for the Common Stock, the Company believes there to be at least
250 beneficial owners holding their shares in brokerage accounts. The following
description of the Company's securities does not purport to be complete and is
subject to and qualified in its entirety by reference to the Certificate of
Incorporation and By-laws of the Company and the provisions of applicable law.

Each holder of Common Stock is entitled to all rights and privileges of holders
of common stock under Delaware law, which provides that: (1) such holders are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors out of legally available funds; (2) in the
event of the liquidation, dissolution or winding up of a corporation, such
holders are entitled to share ratably in all assets remaining after the payment
of liabilities and (3) such holders do not have preemptive rights or other

                                      (21)

<PAGE>

rights to subscribe for additional shares. There are no redemption or sinking
fund provisions applicable to the Common Stock. Each Common Stock holder has the
right to one vote for each share he owns. As there is no cumulative voting for
the election of directors or any other purpose, the persons holding a majority
of the outstanding shares voted in any election of directors will be able to
elect all directors. All outstanding shares of Common Stock are duly authorized,
validly issued, fully paid and non-assessable. All shares of Common Stock are
issued in registered form and are freely transferable, subject to applicable
securities laws and to restrictive agreements between the Company and the
holders of such shares.

Transfer Agent

The Transfer Agent for the Common Stock and Class A Warrants is OTC Corporate
Transfer Service Company, P.O. Box 501, Hicksville, New York 11801
(516-433-6503).

Item 12. Indemnification of Directors and Officers

Section 102(b)(7) of the Delaware General Corporation Law grants corporations
the right to limit or eliminate the personal liability of their directors for
monetary damages for breach of their fiduciary duty except for breaches of the
director's duty of loyalty to the corporation or its stockholders, for acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, for certain transactions involving unlawful payments on
account of dividends or repurchase or redemption of the corporation's stock, and
for transactions in which the directors derive an improper personal benefit. The
Company's Certificate of Incorporation provides for the elimination of personal
liability of a director to the Company and its stockholders for monetary damages
for the breach of the director's fiduciary duty to the full extent allowable
under Section 102(b)(7).

Section 145 of the Delaware General Corporation Law grants corporations the
right to indemnify their directors, officers, employees and agents against
expenses, judgment, fines and other amounts paid pursuant to settlement of any
pending, completed or threatened legal action to which any of such persons
becomes a party by reason of the fact that he is or was a director, officer,
employee or agent of the corporation so long as the indemnity has acted in good
faith and in a manner he reasonably believes to be or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, has had no reasonable cause to believe that his conduct was
unlawful. The Company's Certificate of Incorporation provides for
indemnification of such persons to the full extent allowable under applicable
law.

                                      (22)

<PAGE>


Item 13. Financial Statements and Supplementary Data

See the attached financial statements listed in Item 15.

Item 14. Changes in Registrant's Certifying Accountants

The Company's consolidated financial statements were previously audited by
Cherry Bekaert & Holland LLP as of and for the year ended March 31, 1997 and by
Serotta Maddocks Evans & Co. as of and for the year ended March 31, 1998. The
Company in March, 1998 decided, with approval by the Board of Directors, to
dismiss Cherry Bekaert & Holland LLP and change to Serotta Maddocks Evans & Co.
On March 18, 1999, the Company, with the approval by the Board of Directors,
decided to change audit services from Serotta Maddocks Evans & Co. to Gifford,
Hillegass & Ingwersen, P.C. This decision was based on the fact that Serotta
Maddocks Evans & Co. does not provide audit services to SEC reporting entities.

The reports of Cherry Bekaert & Holland LLP and Serotta Maddocks Evans & Co.
over the past two fiscal years contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle.

In connection with the audits for the two most recent fiscal years and through
March 18, 1999, there have been no disagreements with Cherry Bekaert & Holland
LLP or Serotta Maddocks Evans & Co. on any matter of accounting principles or
practices, financial statements disclosure, or auditing scope or procedure,
which disagreements if not resolved to the satisfaction of Cherry Bekaert &
Holland LLP and Serotta Maddocks Evans & Co. would have caused them to make
reference thereto in their report on the financial statements for such years.
There have been no reportable events during the two most recent fiscal years and
through March 18, 1999.








                                      (23)

<PAGE>


Item 15. Financial Statements and Exhibits

Financial Statements

Item                                                                 Page No.
- - ----                                                                 --------

Report of Gifford Hillegass & Ingwersen, P.C.                          F-1
  Independent Accountants
Consolidated Balance Sheets as of March 31, 1998                       F-3
  and March 31, 1999
Consolidated Statement of Operations for the                           F-5
  years ended March 31, 1997,  March
  31, 1998 and March 31, 1999
Consolidated Statement of Changes in                                   F-6
  Shareholders' Equity for the years ended
  March 31, 1997, March 31, 1998 and March 31, 1999
Consolidated Statement of Cash Flows for the year                      F-7
  ended March 31, 1997, March 31, 1998 and March 31, 1999
Notes to Financial Statements                                          F-9


Report of Serotta Maddocks Evans & Co., CPA's                          F-23
  Independent Accountants
Consolidated Balance Sheet as of March 31, 1998                        F-24
Consolidated Statement of Operations                                   F-25
  for the year ended March 31, 1998
Consolidated Statement of Changes in Shareholders' Equity              F-26
  for the year ended March 31, 1998
Consolidated Statements of Cash Flows for the year ended               F-27
  March 31, 1998
Notes to Financial Statements                                          F-28


Report of Cherry Bekaert & Holland LLP,                                F-35
  Independent Accountants
Consolidated Balance Sheet as of March 31, 1997                        F-36
Consolidated Statement of Operations                                   F-38
  for the year ended March 31, 1997
Consolidated Statement of Changes in Shareholders' Equity              F-39
  for the year ended March 31, 1997
Consolidated Statements of Cash Flows for the year ended               F-40
  March 31, 1997
Notes to Financial Statements                                          F-41


Exhibits

  3(i)    Certificate of Incorporation of the Company,                 E-1
           as amended
  3(ii)   By-laws of the Company                                       E-11
  10.1    Employment Agreement between the Company and E.              E-21
           Samuel Evans dated April 26, 1996
  10.2.1  Rental  Agreement  between the Company and E.                E-26
           Samuel Evans dated  February  15, 1995
           covering the rental of manufactured home sales
           office
  10.2.2  Rental Agreement between the Company and                     E-27
           E. Samuel Evans dated January 1, 1997 covering
           the rental of a manufactured home sales office
  16.1    Letter re changes in certifying accountants                  E-28
           from Cherry, Bekaert & Holland, LLP
  16.2    Letter re changes in certifying accountants                  E-29
           from Serotta Maddocks Evans & Co., CPA'S
  21      List of subsidiaries of the Company                          E-30
  23.1    Consent of Independent Accountants                           E-31
           Cherry Bekaert & Holland, LLP
  23.2    Consent of Independent Accountants                           E-32
           Serotta Maddocks Evans & Co., CPA'S
  23.3    Consent of Independent Accountants                           E-33
           Gifford Hillegass & Ingwersen, P.C.
  27      Financial Data Schedule



                                      (24)

<PAGE>



                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors
Apple Homes Corporation and Subsidiaries
Evans, Georgia


     We have audited the accompanying  consolidated balance sheet of Apple Homes
Corporation  and  Subsidiaries  at March 31, 1999, and the related  consolidated
statements of operations,  changes in stockholders'  equity,  and cash flows for
the  year  then  ended.   These  consolidated   financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these  consolidated  financial  statements  based on our  audit.  The
consolidated  financial  statements of Apple Homes  Corporation  as of March 31,
1998 were audited by other auditors whose report dated June 15, 1998 (except for
Notes 13 and 16, dated June 23, 1999) expressed an unqualified  opinion on those
statements.  The consolidated financial statements of Apple Homes Corporation as
of March 31, 1997 were audited by other auditors, whose report dated January 26,
1998 expressed an unqualified opinion on those statements.  As discussed in Note
M  to  these  consolidated  financial  statements,  the  consolidated  financial
statements for March 31, 1998 and 1997 have been adjusted to reflect  correction
of errors related to these years.

     We conducted  our audit in  accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

                                      F-1


<PAGE>


     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects,  the financial position of Apple Homes
Corporation  and  Subsidiaries  as of March 31,  1999,  and the results of their
operations  and their  cash  flows for the year then  ended in  conformity  with
generally accepted accounting principles.




                                       /s/  Gifford, Hillegass & Ingwersen, P.C.
                                       -----------------------------------------
                                            GIFFORD, HILLEGASS & INGWERSEN, P.C.


June 23, 1999

                                      F-2
<PAGE>
<TABLE>
<CAPTION>


APPLE HOMES CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets


====================================================================================

                                         Assets
                                                                    March 31,
                                                           -------------------------
                                                              1999           1998
- - ------------------------------------------------------------------------------------

<S>                                                         <C>          <C>
Current assets
       Cash                                                $   683,452   $   922,176
       Accounts receivable                                     781,723       240,445
       Rebates receivable                                      409,011          --
       Other receivable                                         57,645       165,766
       Inventories (Notes C and F)                           8,317,210     5,251,617
       Other current assets                                     18,116        95,087
       Deferred taxes (Note J)                                 107,520        74,531
       Notes receivable, current portion (Note E)              544,955        42,883

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

            Total current assets                            10,919,632     6,792,505
                                                           -----------   -----------

Property and equipment, net (Notes D and H)                  1,235,876       402,160
                                                           -----------   -----------

Other assets
       Notes receivable, net of current portion (Note E)       184,215       679,761
       Deferred taxes (Note J)                                    --          78,102
       Deferred loan costs, net of accumulated
         amortization of $92,954 and $74,954                    89,325        87,050
       Goodwill, net of accumulated amortization
         of $39,747 and $29,979 (Note P)                       434,341       292,175
       Other assets                                             43,195          --
                                                           -----------   -----------

            Total other assets                                 751,076     1,137,088
                                                           -----------   -----------

       TOTAL ASSETS                                        $12,906,584   $ 8,331,753
                                                           ===========   ===========


====================================================================================


                                       F-3
<PAGE>





====================================================================================

                            Liabilities and Stockholders' Equity
                                                                  March 31,
                                                       -----------------------------
                                                            1999             1998
- - ------------------------------------------------------------------------------------

Current liabilities
       Floorplan payable (Note F)                       $  7,993,154    $  4,641,509
       Accounts payable                                      746,969         421,493
       Sales tax payable                                     170,749         207,009
       Accrued salaries and commissions                       90,926         230,799
       Other accrued liabilities                             195,640         309,490
       Customer deposits                                     132,037          96,704
       Income tax payable                                     18,826            --
       Due to minority stockholders                           40,407         128,440
       Notes payable, current portion (Notes G and H)         87,933         116,249
                                                        ------------    ------------

            Total current liabilities                      9,476,641       6,151,693
                                                        ------------    ------------

Long term liabilities
       Notes payable (Notes G and H)                       1,054,316         491,508
                                                        ------------    ------------

Minority interest in net assets of
       consolidated corporation                               84,517          79,496
                                                        ------------    ------------
Commitments and contingencies (Note O)

Stockholders' equity
       Common stock, $.002 par value; authorized
            10,000,000 shares; 2,091,539 and
            1,790,614 issued and outstanding                   4,183           3,581
       Additional paid-in capital                          2,727,809       2,150,661
       Retained deficit                                     (440,882)       (545,186)
                                                        ------------    ------------

            Total stockholders' equity                     2,291,110       1,609,056
                                                        ------------    ------------


       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $ 12,906,584    $  8,331,753
                                                        ============    ============




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


                                       F-4


<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

======================================================================================================================

                                                                                   Year ended March 31,
                                                                        1999               1998               1997
- - ----------------------------------------------------------------------------------------------------------------------

Sales                                                               $ 33,776,250       $ 25,615,535       $ 15,549,376
Cost of Sales                                                         27,849,088         20,543,498         12,327,352
                                                                    ------------       ------------       ------------

      Gross Profit                                                     5,927,162          5,072,037          3,222,024
                                                                    ------------       ------------       ------------

Operating expenses
      Compensation                                                     2,948,697          2,354,711          1,416,052
      Occupancy and vehicle                                              269,482            357,735            239,413
      Advertising                                                        639,072            352,610            194,151
      Insurance                                                          223,001            196,223            101,373
      Taxes and licenses                                                 301,447            296,081            140,489
      Professional fees                                                  125,805            219,417            147,383
      Depreciation and amortization                                       97,562             70,059             37,980
      Other                                                            1,569,292          1,190,239            828,645
                                                                    ------------       ------------       ------------

           Total operating expenses                                    6,174,358          5,037,075          3,105,486
                                                                    ------------       ------------       ------------

           Operating income (loss)                                      (247,196)            34,962            116,538

Other income (expense)
      Finance participation                                              429,814            136,460               --
      Rental income                                                       92,200               --                 --
      Interest income                                                     88,140             27,137             49,457
      Commissions                                                        231,183            107,666             36,851
      Other income (expense)                                              17,528            380,082             (5,332)
      Interest expense                                                  (424,637)          (613,560)          (599,322)
                                                                    ------------       ------------       ------------

           Total other income (expense)                                  434,228             37,785           (518,346)
                                                                    ------------       ------------       ------------

Income (loss) before income tax provision and minority interest          187,032             72,747           (401,808)

Income tax (provision) benefit                                           (72,739)           116,114             33,333

Minority interest in net income of consolidated subsidiaries              (9,989)          (240,392)           (71,051)
                                                                    ------------       ------------       ------------

           NET INCOME (LOSS)                                        $    104,304       $    (51,531)      $   (439,526)
                                                                    ============       ============       ============


Per share data: (Note I)
      Weighted average number of shares outstanding                    1,925,012          1,491,423          1,109,669


      Net income (loss) per share                                   $       0.05       $      (0.03)      $      (0.40)








======================================================================================================================

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



                                                                 F-5
<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES


Consolidated Statements of Changes in Stockholders'  Equity


Years Ended March 31, 1999, 1998, and 1997
===================================================================================================================================

                                                                                            Additional     Retained
                                                                 Number of      Common       Paid-in       Earnings
                                                                  Shares         Stock       Capital       (Deficit)       Total
- - -----------------------------------------------------------------------------------------------------------------------------------

Balance, March 31, 1996                                          1,067,849   $     2,136   $   775,289   $   (54,129)   $   723,296

       Issuance of common stock                                     99,118           198        49,459          --           49,657

       Net loss                                                       --            --            --        (439,526)      (439,526)
                                                               -----------   -----------   -----------   -----------    -----------

Balance, March 31, 1997, as restated (a)                         1,166,967         2,334       824,748      (493,655)       333,427

       Issuance of common stock:
            Stock offering / services, as restated (a)             268,672           537       711,587          --          712,124
            Debt disposition                                       266,475           533       484,467          --          485,000
            Residential land and manufactured homes                 88,500           177       129,859          --          130,036

       Net loss, as restated (a)                                      --            --            --         (51,531)       (51,531)
                                                               -----------   -----------   -----------   -----------    -----------

Balance, March 31, 1998, as restated (a)                         1,790,614         3,581     2,150,661      (545,186)     1,609,056

       Issuance of common stock:
            Professional services                                   66,925           134        88,616          --           88,750
            Debt disposition                                       104,000           208       161,292          --          161,500
            Purchase of subsidiary                                 130,000           260       227,240          --          227,500

       Sale of warrants                                               --            --         100,000          --          100,000

       Net income                                                     --            --            --         104,304        104,304
                                                               -----------   -----------   -----------   -----------    -----------

Balance, March 31, 1999                                          2,091,539   $     4,183   $ 2,727,809   $  (440,882)   $ 2,291,110
                                                               ===========   ===========   ===========   ===========    ===========




(a)  Reference  Note M for  explanation  of restated  balances  and prior period adjustments.



====================================================================================================================================

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



                                                              F-6


<PAGE>
APPLE HOMES CORPORATION AND SUBSIDIARIES


Consolidated Statements of Cash Flows


============================================================================================================================

                                                                                          For the Year Ended March 31,
                                                                             -----------------------------------------------
                                                                                 1999             1998              1997
- - ----------------------------------------------------------------------------------------------------------------------------

Cash flows from operating activities:
       Net income (loss)                                                     $   104,304       $   (51,531)      $  (439,526)

       Adjustments to reconcile net income (loss) to net cash
       provided by (used in) operating activities
            Bad debt expense                                                      51,101            21,324              --
            Bad debt recovery                                                       --             (76,602)             --
            Deferred income taxes                                                 45,113          (116,114)          (29,933)
            Depreciation and amortization                                         97,562            70,059            37,980
            Issuance of common stock for
              professional services                                               74,000              --              49,657
            Issuance of common stock in lieu of
              payment of interest expense                                         38,750              --                --
            Gain on sale of assets                                                  --            (190,137)           (2,500)
            Minority interest in net income of
              consolidated subsidiary                                              9,989           240,392            71,051
       Changes in assets and liabilities, net of effects
         from purchase of subsidiary:
            Accounts receivable                                                 (505,536)         (195,431)           73,726
            Other receivables                                                   (289,790)           98,686          (180,080)
            Inventories                                                       (2,767,830)         (830,859)       (2,215,125)
            Other current assets                                                  76,971           (86,250)           (1,988)
            Notes receivable                                                    (337,627)         (393,507)         (127,748)
            Other assets                                                         (15,356)           14,435            57,995
            Floorplan payable                                                  3,351,645           747,384         2,168,133
            Accounts payable                                                     310,524           (78,766)          359,826
            Accrued expenses                                                    (317,992)          458,980           182,533
            Customer deposits                                                     35,333            (9,968)           75,223
            Other liabilities                                                     18,826            (2,009)           27,009
                                                                             -----------       -----------       -----------

                  Net cash provided by (used in) operating activities            (20,013)         (379,914)          106,233
                                                                             -----------       -----------       -----------

Cash flows from investing activities:
       Additions to property and equipment                                      (257,783)         (145,022)         (161,803)
       Excess of cash acquired over cash paid for
         purchsed subsidiary                                                      44,805              --                --
       Proceeds from the sale of developed
         residential land and manufactured homes                                    --             292,000             2,500
       Advances to related entities                                                 --             132,999           (64,099)
                                                                             -----------       -----------       -----------

                  Net cash provided by (used in) investing activities           (212,978)          279,977          (223,402)
                                                                             -----------       -----------       -----------








============================================================================================================================




                                                           F-7
<PAGE>


===========================================================================================================================

                                                                                        For the Year Ended March 31,
                                                                            -----------------------------------------------
                                                                               1999               1998            1997
- - ---------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
     Principal payments on notes payable                                    $  (181,346)       $ (402,891)      $   (68,461)
     Proceeds from issuance of notes payable                                    188,889              --             862,027
     Payments made for loan cost                                                (20,275)             --                --
     Additions to deferred underwriting cost                                       --                --            (200,926)
     Proceeds from issuance of common stock and warrants                        100,000         1,058,312            45,528
     Distributions paid to minority stockholders                                   --            (185,393)         (111,499)
     Due to/from minority stockholders, net                                     (93,001)          128,440              --
     Repayments on advances from officers                                          --             (19,000)          (34,082)
                                                                            -----------       -----------       -----------

                Net cash provided (used) by financing activities                 (5,733)          579,468           492,587
                                                                            -----------       -----------       -----------

                Net increase (decrease) in cash                                (238,724)          479,531           375,418

Cash, beginning of year                                                         922,176           442,645            67,227
                                                                            -----------       -----------       -----------

Cash, end of year                                                           $   683,452       $   922,176       $   442,645
                                                                            ===========       ===========       ===========



Supplemental disclosure of cash flow information:

     Cash paid during the year for interest                                 $   533,881       $   602,000       $   503,982
                                                                            ===========       ===========       ===========

     Cash paid during the year for income taxes                             $     8,770       $      --         $      --
                                                                            ===========       ===========       ===========

     Non cash investing and financing activities:

                Financed property and equipment purchases                   $   644,449       $    35,036       $      --
                Purchased subsidiary through
                  Issuance of common stock                                      227,500              --                --
                  Seller financing                                               20,000              --                --
                Repossessed mobile home units
                  converted to inventory                                        280,000              --                --
                Converted developed residential land to:
                     Inventory                                                     --             449,314              --
                     Property and equipment                                        --             132,477              --
                Note payable and interest converted to common stock              98,750              --                --
                Debentures converted to common stock                             77,500           485,000              --
                Issuance of stock for professional services                      74,000           150,000              --
                Developed residential land received in exchange for:
                     Accounts receivable                                           --              51,134              --
                     Notes receivable                                              --             210,591              --
                     Common stock                                                  --             130,000            54,700
                Transfer of deferred underwriting cost against
                  related capital contributio                                      --             346,152              --



===========================================================================================================================

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


                                                              F-8
</TABLE>



<PAGE>


                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------


NOTE A - NATURE OF BUSINESS

The principal  operations of Apple Homes  Corporation and its subsidiaries  (the
"Company") consist of the sale and installation of manufactured homes, primarily
in the southeastern  United States.  The subsidiaries of Apple Homes Corporation
consist of the following:


Name                                      Location             Percent Ownership
- - --------------------------------------------------------------------------------

Augusta Housing Center, Inc.          Augusta, Georgia                100%
Big Daddy's Mobile Homes, Inc.        Augusta, Georgia                 80%
Evans-Lanier, Inc.                    Thomson, Georgia                 80%
Apple Homes, Inc.                     Waynesboro, Georgia             100%
J. C. Homes, Inc.                     Augusta, Georgia                 80%
Tim Phillips Homes, Inc.              Thomson, Georgia                 80%
Mobile Air Systems, Inc.              Augusta, Georgia                100%

All  subsidiaries  conduct  business  in the name of Apple  Homes.  The  Company
extends customary trade terms to some of its customers,  all of whom are located
in the southeastern United States.


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation
The consolidated  financial  statements  include the accounts of the Company and
its wholly  owned and majority  owned  subsidiaries.  All material  intercompany
accounts and transactions are eliminated in consolidation.

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

Receivables
The Company uses the allowance method to provide for recognition of bad debt.

                                      F-9

<PAGE>


                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Inventories
Inventories  are stated at the lower of cost or market and are determined  using
the specific identification method.

Property and Equipment
Property and equipment are stated at cost.  Maintenance  and repairs are charged
to expense as incurred, and renewals and betterments are capitalized. Provisions
for  depreciation  are charged to income over the estimated  useful lives of the
assets using methods  applicable  for income tax  purposes,  which do not differ
significantly from generally accepted accounting principles.

Deferred Loan Costs
Deferred loan costs related to the private placements of subordinated debentures
described in Note G are being  amortized  over the expected  life of the related
debt using a method that approximates the interest method.

Goodwill
Goodwill  represents the excess of acquisition  costs over the fair market value
of the net assets of acquired  subsidiaries.  Goodwill is being  amortized  on a
straight-line  basis over a period of forty years.  In  accordance  with APB 17,
"Intangible  Assets," the Company continues to evaluate the amortization  period
to  determine  whether  events or  circumstances  warrant  revised  amortization
periods.

Advertising Costs
The Company expenses advertising costs as they are incurred.

Income Taxes
Income taxes are allocated among Apple Homes  Corporation  and its  subsidiaries
based upon their respective  separate taxable income or loss. Deferred taxes are
recognized  for  differences  between  the basis of assets and  liabilities  for
financial statement and income tax purposes. The differences relate primarily to
allowance for doubtful receivables  (deductible for financial statement purposes
but not for  income  tax  purposes),  inventory  capitalization  for  income tax
reporting,  and the  value of net  operating  losses  for tax  purposes  carried
forward from prior  years.  The  deferred  tax assets  represent  the future tax
return  consequences  of these  differences,  which will be deductible  when the
assets are recovered or settled.

                                      F-10

<PAGE>


                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments
The carrying amounts of cash,  receivables,  and payables approximate fair value
because  of the short  maturity,  generally  less than  three  months,  of these
instruments.  The carrying value of the Company's notes receivable  approximates
fair value because the majority of the  outstanding  balance was adjusted to the
sales price of the notes sold subsequent to year end as described in Note E. The
carrying value of the Company's  long-term debt  approximates fair value because
current market prices and the Company's current  incremental  borrowing rate are
not significantly different from the terms in the Company's debt portfolio.

Concentration of Credit Risk
The Company is subject to credit risk  through  trade and note  receivables  and
uninsured cash balances.  The majority of the Company's  business is from retail
trade of manufactured homes in the southeastern United States. Consideration was
given to this  concentration and the financial  position of these customers when
determining  the allowance  for doubtful  accounts.  Reference  Note O regarding
potential recourse liability. Cash is  placed in well capitalized,  high quality
financial  institutions.  The Federal Insurance  Corporation insures accounts at
each  institution  up to $100,000.  At March 31, 1999  balances in excess of the
$100,000 limit amounted to approximately $285,000.

Reclassifications
Certain 1998 and 1997 amounts  have been  reclassified  to conform with the 1999
presentation.  These  reclassifications  had no effect on net income or loss for
the years.



                                      F-11

<PAGE>



                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------


NOTE C - INVENTORIES

At March 31, 1999 and 1998, inventories consisted of:

                                                 1999                  1998
                                            ---------------      --------------
         New Manufactured Homes             $     7,377,858      $    4,537,876
         Repossessed Homes                          191,513                 -0-
         Used Manufactured Homes                    194,233             264,427
         Air Conditioning Units                      89,088                 -0-
         Land and Home Packages                     464,518             449,314
                                            ---------------      --------------
                                            $     8,317,210      $    5,251,617
                                            ===============      ==============


NOTE D - PROPERTY AND EQUIPMENT

At March 31, 1999 and 1998, property and equipment consisted of:

                                                  1999                1998
                                             -------------       -------------
         Land                                $     325,000       $         -0-
         Buildings                                 416,930             200,477
         Furniture and Fixtures                     86,194              56,604
         Vehicles                                  176,250              73,559
         Leasehold Improvements                    173,594                 -0-
         Machinery and Equipment                    34,337                 -0-
         Rental Units                              134,186             132,477
                                             -------------       -------------
                                                 1,346,491             463,117
         Less Accumulated Depreciation            (110,615)            (60,957)
                                             -------------       -------------
                                             $   1,235,876       $     402,160
                                             =============       =============


NOTE E - NOTES RECEIVABLE

Notes receivable result from Company financial sales of manufactured  homes. The
notes have remaining  terms of one to thirty years and interest rates range from
8% to 15%.  Subsequent to March 31, 1999, the Company sold notes receivable with
a face value of $596,717 to a financing  company for  $481,605.  The discount of
$115,112  was recorded at March 31, 1999 as part of the  allowance  for doubtful
accounts of $148,277.

Of the  thirty-two  notes which were sold by the  Company,  nineteen  notes have
recourse for twelve months, and thirteen notes were sold  without recourse.  The

                                      F-12

<PAGE>


                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------


NOTE E - NOTES RECEIVABLE (continued)

conditions of the recourse  allow the Company the option to make any payments on
the owners'  behalf to avoid defaults in the loan and give the Company the right
to collect  directly from the owners for any such payments  made. No reserve has
been recorded for this recourse, as management believes the Company will be able
to collect on any outstanding payments.

Notes receivable at March 31, 1998 are net of an allowance for doubtful accounts
of $97,041.

NOTE F - FLOORPLAN PAYABLE

The Company has  maintained  a floorplan  line of credit of  $10,275,000  during
1999 and  $7,150,000  during 1998 with several  finance  companies for new homes
inventory. These credit lines are collateralized by the homes and are guaranteed
by an officer of the  Company.  Interest  rates  range from prime to prime + 2%,
depending on several factors,  including the number of days a home is on a sales
lot.  Of the  available  line,  $7,993,154  was  utilized  on March 31, 1999 and
$4,641,509 was utilized on March 31, 1998.

For the years  ended  March 31,  1999 and  1998 floorplan  interest  expense was
$385,394 and $404,814, respectively.


NOTE G - SUBORDINATED DEBENTURES

During the year ended March 31, 1994, the Company  completed a private placement
of seventeen debentures in the principal amount of $300,000.  The debentures are
due in 2003, pay interest  semi-annually  at 10.0%,  and are  convertible by the
holders  after  two  years  into  shares  of the  Company's  common  stock  at a
conversion  ratio of $1.25 per  share.  As of March  31,  1999,  $77,500  of the
original  debenture amount had been converted into 62,000 shares of stock.  None
of the debentures were converted during the year ended March 31, 1998.

In December 1998, the Company offered convertible  subordinated  debentures as a
private  placement  pursuant to Rule 504 of Regulation D of the 1933  Securities
Act. The offering is not to exceed $900,000.  As of March 31, 1999, $137,500 had
been issued to investors.  In April, 1999, an additional $65,000 was issued. The
debentures  are due five years from  their  date of issue.  They bear  interest,
payable  semiannually,  at a rate of 10% per annum.  They are  convertible  into
common stock of the Company at the conversion price of $5.00 per share.

The debentures are  subordinated  in right of payment to holders of senior debt,
including bank borrowings and floorplan financing.

                                      F-13

<PAGE>

                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------


NOTE H - NOTES PAYABLE

At March 31 1999, and 1998, notes payable consisted of the following:

                                                       1999             1998
                                                    ----------      -----------

Subordinated debentures (see Note G)                $  360,000       $  300,000

Note payable to Sun Trust with  interest
at 7.25%, monthly payments of $2,115 due
through  December  2001;  secured  by an
office building and personal guarantees
of the Company president and a director.               228,802              -0-

Note payable to  Southeastern  at 9.50%,
monthly  payments  of $2,663 due through
November 2013;  secured by land.                       252,393              -0-

Note payable to McDuffie  Bank &Trust at
10.25%,  monthly  payments of $1,830 due
through September 2000;  secured by land
and personal  guarantees  of the Company
president  and a  director.                            116,247          126,335

Note  payable  to a  stockholder  at 10%
interest, principal and accrued interest
of  $38,749  due  in   September   1998;
unsecured.                                                 -0-           85,000

Other  notes  payable  to banks  bearing
interest ranging from prime plus .85% to
18%  fixed,  monthly  payments  totaling
$4,566,  maturing between April 1999 and
November  2002;   secured  primarily  by
automobiles.                                           114,489           66,690


Other  notes  payable  bearing  interest
rates   ranging  from  4.9%  to  11.08%,
monthly payments  totaling $708 maturing
between November 2001 and February 2002;
secured by various equipment.                           22,111              -0-



                                      F-14

<PAGE>

                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------


NOTE H - NOTES PAYABLE (continued)

                                                       1999             1998
                                                    ----------       ----------
Unsecured note payable to an individual;
principal  and  interest at 10%,  due in
monthly  installments  of $1,062 through
November 2000                                       $   20,389       $   29,732

Other  unsecured  notes  payable  due in
full over the next year.                                27,818              -0-
                                                    ----------       ----------

                                                     1,142,249          607,757
Less current portion                                   (87,933)        (116,249)
                                                    ----------       ----------
                                                    $1,054,316       $  491,508
                                                    ==========       ==========


As of March 31, 1999 future maturities are as follows:

Year ending March 31, 1999

          2000                                      $   87,933
          2001                                          80,022
          2002                                         264,745
          2003                                          35,427
          2004                                         254,986
          2005 and thereafter                          419,136
                                                    ----------

                                                    $1,142,249
                                                    ==========


NOTE I - EARNINGS PER SHARE

Basic  earnings  (loss) per share is  computed  by  dividing  net income or loss
attributable  to  common  shares  by  the  weighted  average  of  common  shares
outstanding during the period. Diluted earnings per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were  exercised or  converted  into common  stock.  The  accompanying  financial
statements do not include diluted  earnings per share because  conversion of the
subordinated  debentures  described in Note G and exercise of the stock warrants
described in Note N are antidilutive for the years presented.


                                      F-15

<PAGE>

                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------

NOTE J - INCOME TAXES

For the years ended March 31, 1999,  1998,  and 1997 the income tax  (provision)
benefit consisted of:

                                   1999          1998             1997
                               -----------    ------------    -----------
       Current:
            Federal            $       -0-    $      -0-      $     -0-
            State                  (27,596)          -0-            -0-
                               -----------    ------------    -----------
                                   (27,596)          -0-            -0-
                               -----------    ------------    -----------
       Deferred:
            Federal                (38,372)         98,697         28,333
            State                   (6,771)         17,417          5,000
                               -----------    ------------    -----------
                                   (45,143)        116,114         33,333
                               -----------    ------------    -----------

                               $   (72,739)   $    116,114    $    33,333
                               ===========    ============    ===========

The  reconciliation  of reported  income tax (expense)  benefit to the amount of
income tax (expense)  benefit that would result from applying federal  statutory
tax rates to pretax income is as follows:





                                      F-16

<PAGE>

                   APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------


NOTE J - INCOME TAXES (continued)
<TABLE>
<CAPTION>

                                                            Year ended March 31,
                                       ------------------------------------------------------------------------
                                                 1999                      1998                       1997
                                       ----------------------     ---------------------      ------------------
                                        Balance          %         Balance          %         Balance       %
                                       ----------------------     ---------------------      ------------------
<S>                                    <C>             <C>        <C>             <C>        <C>           <C>
Statutory federal income tax           $ (63,891)      (34.0)     $ (24,734)      (34.0)     $ 136,615     34.0
State income tax, net of
    federal tax benefit                  (27,596)       (14.8)          -0-         -0-           -0-       -0-
Non deductible expenses                  (36,252)       (19.4)       (2,815)       (3.9)          -0-       -0-
Valuation allowance change                55,000         29.3       143,663       197.5       (103,282)    (25.7)
                                       ---------       ------     ---------    --------       --------    ------
                                       $ (72,739)       (38.9)    $ 116,114       159.6       $ 33,333       8.3
                                       =========       ======     =========    ========       ========    ======

The components of deferred tax assets were as follows:

                                                                  March 31,
                                               ----------------------------------------------
                                                    1999            1998            1997
                                               -------------   --------------  --------------
       Net operating loss carryforward         $      35,495   $      150,063  $      198,663
       Allowance for doubtful accounts                59,311           38,816          36,519
       Inventory capitalization                       12,714           18,754             -0-
                                               -------------   --------------  --------------
                                                     107,520          207,633         235,182
       Less valuation allowance                          -0-         (55,000)        (198,663)
                                               -------------   -------------   --------------
                                               $     107,520   $      152,633  $       36,519
                                               =============   ==============  ==============
</TABLE>

SFAS No. 109  requires a  valuation  allowance  to be  recorded  when it is more
likely  than  not  that  some or all of the  deferred  tax  assets  will  not be
realized.  At March 31,  1999,  due to improved  profitability  of the  Company,
management  determined  that it was more  likely  than not that  future  taxable
income would be  sufficient to enable the Company to realize all of its deferred
tax assets.  Accordingly,  no valuation allowance has been recorded at March 31,
1999. As of March 31, 1999,  the remaining net operating  loss  carryforward  of
approximately $88,000 will expire in varying amounts through 2012.


NOTE K - RELATED PARTY TRANSACTIONS

During the years ended March 31, 1999, 1998, and 1997 rent of $33,445,  $33,000,
and  $21,444,   respectively,  was  paid  to  an  officer  of  the  Company  for
month-to-month  leasing arrangements.  In addition,  the Company paid floor plan
guaranty  fees of $147,560  and  $159,019  during the years ended 1999 and 1998,
respectively, to an officer.

During the year ended March 31, 1999, the Company  employed the president's wife
in a consulting  capacity.  She decorated and furnished  manufactured homes that
the Company  sells to its retail  customers.  Related  compensation  amounted to
approximately  $153,000,  which included reimbursement of her direct expenses of
approximately $24,000.

                                      F-17

<PAGE>

                   APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------


NOTE K - RELATED PARTY TRANSACTIONS (continued)

During the year ended March 31, 1998 the Company received developed  residential
land from related parties in exchange for accounts receivable of $51,134,  notes
receivable  of  $210,591,  and the  issuance  of common  stock of  $130,000.


NOTE L - EQUITY INCENTIVE PLAN

In a prior year,  the  Company  approved an Equity  Incentive  Plan  designed to
attract  and  retain  key  employees.  The  Plan,  administered  by a  committee
appointed by the Board of Directors,  provides for stock options and other stock
based  awards to reward  employees,  as the  Committee  deems  appropriate.  The
Company  approved the allocation of up to 1,000,000 shares of common stock to be
used in the Plan. No stock has been awarded under this Plan.


NOTE M -- PRIOR PERIOD ADJUSTMENTS

The balance of retained  earnings  (deficit) at March 31, 1997 has been restated
to  correct  an  error  in  accounting.  The  retained  earnings  (deficit),  as
previously   reported  at  March  31,  1997  of  $(605,154)   was  inclusive  of
distributions  of $111,499  paid to minority  stockholders  of  partially  owned
subsidiaries  during  1997  which  should  have been  applied  against  minority
interest liability and not retained earnings. The effect of the correction is to
reduce the  retained  earnings  (deficit) at March 31, 1997 from  $(605,154)  to
$(493,655). This correction does not impact the previously reported net loss for
the year ended March 31, 1997.

The balances of retained earnings  (deficit),  paid-in capital and net income as
of and for the year ended March 31,  1998,  as  previously  reported,  have been
restated  to  correct  errors  in  accounting.  These  corrections  are based on
information  discovered subsequent to the original release of the March 31, 1998
financial statements. The corrections are summarized as follows:

                                      F-18


<PAGE>

                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>


NOTE M -- PRIOR PERIOD ADJUSTMENTS (continued)

                                                          Additional         Retained             Net
           Year Ended March 31, 1998                       Paid-in           Earnings            Income
           -------------------------                       Capital           (Deficit)           (Loss)
                                                         -----------       ------------       -------------
<S>                                                      <C>               <C>                <C>
Balance at beginning of year, as previously              $   824,748       $   (605,154)
   reported

   As previously reported:
        Prior period adjustment                                    -             93,145
        Issuance of common stock
            Stock offering/other cash                        659,306                  -
                                                                   -
            Debt disposition                                 484,467                  -
            Residential land and manufactured
                homes                                        129,859                  -

   Distributions paid to minority interest                         -           (240,392)

   Net income                                                      -            202,982        $ 202,982
                                                            ---------          --------        ---------
Balance at March 31, 1998, as previously
   reported                                                 2,098,380          (549,419)

   Correction of classification of 1997
        distributions to minority stockholders                      -           111,499

     Correction of:
        Prior period adjustment                                     -           (93,145)          (93,145)
        Valuation of stock issued for services,
             offering cost and contributions to
             capital                                           52,281                 -           (52,281)
        Revenue cut off, accrued expenses and
             minority interest                                      -                 -          (205,036)
        Income tax provision                                        -                 -            95,949
        Classification of 1998 distributions to
              minority stockholders                                 -           240,392                 -
                                                                                                ----------
              Total 1998 net income adjustments                                (254,513)         (254,513)
                                                           -----------       ----------         ----------
Balances at March 31, 1998, as restated                    $ 2,150,661       $ (545,186)        $ (51,531)
                                                           ===========       ==========         ==========
</TABLE>


                                                   F-19

<PAGE>



                   APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------


NOTE M -- PRIOR PERIOD ADJUSTMENTS (continued)

The net  effect  of the  adjustments  to net  income  noted  above was to change
earnings  per  share of  $0.14,  as  previously  reported,  to loss per share of
$(0.03).


NOTE N - WARRANTS

At March 31,  1999,  the  Company had  outstanding  Class A Warrants to purchase
2,913,872  shares of the Company's common stock at $6.50 per share. The warrants
expire on December 31, 2001.


NOTE O - COMMITMENTS AND CONTINGENCIES

At March 31, 1999, the Company was contingently liable for outstanding mortgages
placed with third party lenders on several homes that were  previously sold with
recourse for various limited periods of time. The original mortgages at the time
of sale were approximately $859,000.  Management estimates that the range of any
future possible loss if the owners default on these mortgages is between $86,000
and $129,000.  These  estimates are based on the Company's past  performance and
industry  averages for manufactured  homes that are repossessed and then resold.
These losses are expensed when incurred as normal operating cost.

The Company has several operating leases that are month to month contracts. Rent
expense for the years ended March 31, 1999, 1998 and 1997 totaled  approximately
$366,000, $213,000 and $82,000 respectively.


NOTE P -- ACQUISITIONS

On January 1, 1999, the Company acquired 100% of the issued outstanding stock of
Mobile Air Systems,  Inc. for $10,000 cash,  $20,000 note  payable,  and 130,000
shares of common  stock of Apple  Homes  Corporation  valued  at  $227,500.  The
transaction  was  accounted  for as a  purchase,  and  goodwill in the amount of
$181,051 was  recognized,  which is being  amortized over 40 years for financial
reporting.  The pro forma results on the  operations of the Company for the past
two years is insignificant.


NOTE Q - EMPLOYEE BENEFIT PLAN

The Company  sponsors a 401(k) Profit Sharing Plan. All individuals  employed on
March 15, 1999 were eligible to participate in the plan immediately. Individuals
employed  after  March 15,  1999 must  complete  six months of service  and have
attained  the  age of 21.  Eligible  employees  are  allowed  to  make  elective
deferrals of compensation to the plan in accordance with the 401(k)  provisions.
The Company may elect to make additional  contributions under the profit sharing
provisions of the plan. There were no Company contributions made to the plan for
the year ended March 31, 1999.

                                      F-20

<PAGE>



                   APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------


NOTE R - PENDING ACCOUNTING PRONOUNCEMENTS

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, which is effective
for all fiscal  quarters of all fiscal years beginning after June 15, 1999. This
Statement   establishes   accounting  and  reporting  standards  for  derivative
instruments  and  hedging  activities.  Management  does  not  believe  that the
adoption  of this  statement  will be  material  to the  consolidated  financial
statements.

In March 1998, the American  Institute of Certified  Public  Accountants  issued
Statement of Position ("SOP") 98-1, Accounting for the Cost of Computer Software
Developed  or Obtained  for  Internal  Use.  This SOP gives  guidelines  for the
capitalization or expensing of certain external and internal costs incurred when
developing  computer software for internal use. The SOP also gives guidelines as
to the amortization of the capitalized  cost. The SOP is effective for financial
statements for fiscal years beginning  after December 15, 1998.  Management does
not believe that the  adoption of this SOP will be material to the  consolidated
financial statements.

In April 1998, the American  Institute of Certified  Public  Accountants  issued
Statement  of  Position  ("SOP")  98-5,  Reporting  on  the  Costs  of  Start-Up
Activities.  This SOP provides  guidance on the financial  reporting of start-up
costs and  organizational  costs.  It requires costs of start-up  activities and
organization  costs  to be  expensed  as  incurred.  This SOP is  effective  for
financial  statements  for  fiscal  years beginning  after  December  15,  1998.
Management  does not believe  that the  adoption of this SOP will be material to
the consolidated financial statements.




                                      F-21

<PAGE>


                   APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------


NOTE S - SELECTED QUARTERLY FINANCIAL DATA  (UNAUDITED)
<TABLE>
<CAPTION>

                                                                   Quarter
                                      -------------------------------------------------------------
                                           1st              2nd              3rd             4th
                                      ------------     ------------    -------------    ------------
                                                    (In thousands except per share data)
       Year ended March 31, 1999

<S>                                   <C>              <C>             <C>              <C>
            Net sales                 $      8,143     $     10,490    $       7,307    $       7,836
            Gross profit                     1,745            1,677            1,109            1,396
            Net income (loss)                  149               20             (81)               16
            Earnings per share        $       0.07     $       0.01    $      (0.04)    $        0.01
                                      ============     ============    ============     =============
            Weighted average
              shares outstanding         1,811,942        1,897,756       1,913,517         2,077,506

       Year ended March 31, 1998

            Net sales                 $      5,957     $      6,408    $       5,794    $       7,457
            Gross profit                     1,196            1,163            1,037            1,676
            Net income (loss)                   61             (84)            (159)              130
            Earnings per share        $       0.05     $     (0.06)    $      (0.10)    $        0.07
                                      ============     ===========     ============     =============
            Weighted average
              shares outstanding         1,166,967       1,446,218        1,599,668         1,748,114

</TABLE>

Earnings per share is computed independently for each of the quarters presented.
Therefore,  the sum of the quarterly earnings per share do not necessarily equal
the total for the year.


                                                   F-22


<PAGE>


                                                                             SME
                                                      --------------------------
                                                      SEROTTA
                                                      --------------------------
Report of Independent Certified Public Accountants    MADDOCKS
                                                      --------------------------
                                                      EVANS & CO., CPA'S
                                                      --------------------------
                                                      A Professional Corporation
                                                      --------------------------

The Board of Directors
Apple Homes Corporation
Augusta, Georgia

We have  audited  the  accompanying  consolidated  balance  sheet of Apple Homes
Corporation  and  Subsidiaries  (the  "Company")  as of March 31, 1998,  and the
related consolidated  statements of operations,  changes in stockholders' equity
and cash flows for the year then ended. These consolidated  financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of  Apple  Homes
Corporation  and  Subsidiaries  as of March 31,  1998,  and the  results  of its
operations  and cash flows for the year then ended in conformity  with generally
accepted accounting principles.

As discussed in Note 16 to the financial statements,  certain errors in reported
amounts  were  discovered  by  management  of  the  Company  subsequent  to  our
previously  issued  1998  report  dated  June 15,  1998.  Accordingly,  the 1998
financial statements have been restated to correct these errors.



/s/  Serotta Maddocks Evans & Co.
- - -----------------------------------
SEROTTA MADDOCKS EVANS & CO., CPA'S

Augusta, Georgia
June 15, 1998, except for Notes 13
and 16, as to which the date is June 23, 1999




- - --------------------------------------------------------------------------------
             701 Greene Street, Suite 200 / Augusta, GA 30901-2322
             Telephone (706) 722-5337 Telefax (706) 724-FAXX (3299)

                                      F-23

<PAGE>
                    APPLE HOMES CORPORATION AND SUBSIDIAREIS
                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 1998

ASSETS
CURRENT ASSETS
     Cash                                                           $   922,176
     Accounts receivable                                                240,445
     Other receivables                                                  165,766
     Inventories                                                      5,251,617
     Other current assets                                                95,087
     Deferred taxes                                                      74,531
     Notes receivable, current portion                                   42,883
                                                                    -----------
         Total Current Assets                                         6,792,505
                                                                    -----------
PROPERTY AND EQUIPMENT, NET                                             402,160
                                                                    -----------
OTHER ASSETS
     Notes receivable, net of allowance
      for bad debt of $97,041                                           679,761
     Deferred taxes                                                      78,102
     Deferred loan acquisition costs,
      net of accumulated amortization of $74,954                         87,050
     Goodwill, net of accumulated
      amortization of $29,979                                           292,175
                                                                    -----------
         Total Other Assets                                           1,137,088
                                                                    -----------
                                                                    $ 8,331,753
                                                                    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
     Floorplan payable                                              $ 4,641,509
     Accounts payable                                                   421,493
     Sales tax payable                                                  207,009
     Accrued salaries and commissions                                   230,799
     Other accrued liabilities                                          309,490
     Customer deposits                                                   96,704
     Due to minority stockholders                                       128,440
     Notes payable, current portion                                     116,249
                                                                    -----------
         Total Current Liabilities                                    6,151,693
                                                                    -----------
LONG-TERM LIABILITIES
     Notes payable                                                      491,508
                                                                    -----------
MINORITY INTEREST IN NET ASSETS
 OF CONSOLIDATED SUBSIDIARY                                              79,496
                                                                    -----------
STOCKHOLDERS' EQUITY
     Common stock, $.002 par value;
      authorized 10,000,000 shares;
      1,790,614 issued and outstanding                                    3,581
     Additional paid-in capital                                       2,150,661
     Retained deficit                                                  (545,186)
                                                                    -----------
         Total Stockholders' Equity                                   1,609,056
                                                                    -----------
                                                                    $ 8,331,753
                                                                    ===========

See notes to consolidated financial statements

                                       F-24

<PAGE>

                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                            YEAR ENDED MARCH 31, 1998
SALES                                                              $ 25,615,535
COST OF SALES                                                        20,543,498
                                                                   ------------
        Gross Profit                                                  5,072,037
                                                                   ------------

OPERATING EXPENSES
     Compensation                                                     2,354,711
     Occupancy and vehicle                                              357,735
     Advertising                                                        352,610
     Insurance                                                          196,223
     Taxes and licenses                                                 296,081
     Professional fees                                                  219,417
     Depreciation and amortization                                       70,059
     Utilities                                                          215,740
     Office and lot                                                     220,523
     Travel and entertainment                                            92,337
     Guaranty fees                                                      159,019
     Rent and maintenance                                               112,811
     Other                                                              389,809
                                                                   ------------
     Total Operating Expenses                                         5,037,075
                                                                   ------------
        Operating Income                                                 34,962
                                                                   ------------

OTHER INCOME (EXPENSE)
     Finance participation and other                                    516,542
     Interest income                                                     27,137
     Commissions                                                        107,666
     Interest expense                                                  (613,560)
                                                                   ------------
     Total Other Income (Expense)                                        37,785
                                                                   ------------
        Income Before Income Tax Provision
          and Minority Interest                                          72,747

INCOME TAX BENEFIT                                                      116,114

MINORITY INTEREST IN NET INCOME
OF CONSOLIDATED SUBSIDIARY                                             (240,392)
                                                                   ------------
        Net Loss                                                    $   (51,531)
                                                                   ============

Per share data:
    Weighted average number of shares outstanding                     1,491,423
    Net loss per share                                              $     (0.03)



See notes to consolidated financial statements


                                       F-25




<PAGE>
<TABLE>
<CAPTION>
                                             APPLE HOMES CORPORATION AND SUBSIDIARIES
                                                CONSOLIDATED STATEMENT OF CHANGES
                                                       IN STOCKHOLDERS' EQUITY
                                                      YEAR ENDED MARCH 31, 1998

                                                                                    Retained
                                                 Common            Paid-in           Earnings
                                                  Stock            Capital          (Deficit)             Total
                                                  -----            -------          ---------             -----

<S>                                             <C>               <C>               <C>                <C>
Balance, March 31, 1997                         $    2,334        $  824,748        $ (493,655)        $  333,427

Issuance of common stock:
  Stock offering/other cash                            537           711,587              --              712,124
  Debt disposition                                     533           484,467              --              485,000
  Residential land and manufactured homes              177           129,859              --              130,036

Net loss                                              --                --             (51,531)           (51,531)
                                                ----------        ----------        ----------         ----------

Balance, March 31, 1998                         $    3,581        $2,150,661        $ (545,186)        $1,609.056
                                                ==========        ==========        ==========         ==========
</TABLE>




See notes to consolidated financial statements


                                                          F-26






<PAGE>
                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                           YEAR ENDED MARCH 31, 1998


CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                       $   (51,531)
     Adjustments to reconcile net loss to net cash
       provided by (used in) operating activities
        Bad debt expense                                                 21,324
        Bad debt recovery                                               (76,602)
        Deferred income taxes                                          (116,114)
        Depreciation and amortization                                    70,059
        Gain on sale of developed residential
         land and manufactured homes                                   (190,137)
        Minority interest in net income of
         consolidated subsidiary                                        240,392
        Cash provided by (used in):
            Accounts receivables                                       (195,431)
            Rebates receivables                                          98,686
            Inventories                                                (830,859)
            Notes receivable                                           (393,507)
            Other assets                                                (71,815)
            Floorplan payable                                           747,384
            Accounts payable                                            (78,766)
            Accrued expenses                                            458,980
            Customer deposits                                            (9,968)
            Other liabilities                                            (2,009)
                                                                    -----------
                Net cash used in operating activities                  (379,914)
                                                                    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Additions to property and equipment                               (145,022)
     Proceeds from the sale of developed
      residential land and manufactured homes                           292,000
     Advances to related entities                                       132,999
                                                                    -----------
                Net cash provided by investing activities               279,977
                                                                    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Principal payments on notes payable                               (402,891)
     Proceeds from issuance of common stock                           1,058,312
     Distributions paid to minority stockholders                       (185,393)
     Due to minority stockholders                                       128,440
     Repayments on advances from officers                               (19,000)
                                                                    -----------
                Net cash provided by financing activities               579,468
                                                                    -----------

                Net increase in cash and cash equivalents               479,531

Cash and cash equivalents, beginning of year                            442,645
                                                                    ===========
Cash and cash equivalents, end of year                              $   922,176
                                                                    ===========

See notes to consolidated financial statements



                                      F-27



<PAGE>


                                                                             SME

                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 1 - NATURE OF BUSINESS
- - ---------------------------

The principal operations of Apple Homes Corporation and its subsidiaries (the
"Company") consist of the sale and installation of manufactured homes primarily
in the southeastern United States. The subsidiaries of Apple Homes Corporation
consist of the following:

Name                                    Location               Percent Ownership
- - --------------------------------------------------------------------------------
Augusta Housing Center. Inc.            Augusta, Georgia             100%
Big Daddy's Mobile Homes, Inc.          Augusta, Georgia              80
Evans-Lanier, Inc.                      Thomson, Georgia              80
Apple Homes, Inc.                       Waynesboro, Georgia           80
J. C. Homes, Inc.                       Augusta, Georgia              80
Tim Phillips Housing, Inc.              Thompson, Georgia             80
New Century Homes, Inc.                 Augusta, Georgia              80


All  subsidiaries  conduct  business  in the name of Apple  Homes.  The  Company
extends customary trade terms to some of its customers,  all of whom are located
in the southeastern United States.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- - ---------------------------------------------------

Consolidation
The consolidated  financial  statements  include the accounts of the Company and
its wholly  owned and majority  owned  subsidiaries.  All material  intercompany
accounts and transactions are eliminated in consolidation.

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

Cash and Cash Equivalents
For purposes of the  statement of cash flows,  the Company  considers all highly
liquid  investments with original  maturities of three months or less to be cash
equivalents.

Receivables
The Company uses the allowance method to provide for recognition of bad debt.





                                       F-28


<PAGE>


                                                                             SME

                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
- - ---------------------------------------------------

Inventory
Inventory is stated at the lower of cost or market and is  determined  using the
specific identification method.

Property and Equipment
Property and equipment are stated at cost.  Maintenance  and repairs are charged
to expense as incurred, and renewals and betterments are capitalized. Provisions
for  depreciation  are charged to income over the estimated  useful lives of the
assets using methods  applicable  for income tax  purposes,  which do not differ
significantly from generally accepted accounting principles.

Advertising Costs
The Company expenses advertising costs as they are incurred.

Income Taxes
Income  taxes are  accounted  for using the  asset and  liability  approach  for
financial  accounting and reporting  purposes.  Under that method,  deferred tax
assets and  liabilities  are  recognized for temporary  differences  between the
financial  statement  carrying  amounts  of  assets  and  liabilities  and their
respective  tax bases.  Deferred tax assets and  liabilities  are measured using
enacted  tax rates  expected  to apply to  taxable  income in the years in which
those temporary  differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.

Net Income Per Share
Net income per share is computed by dividing net income by the weighted  average
number of shares  outstanding  during the year.  The weighted  average number of
shares used in the calculation of net income per share was computed based on the
actual  time  such  shares  were  outstanding  during  the year.  The  Company's
convertible  debentures  (see Note 8) meet the  criteria for  classification  as
common stock  equivalents.  Therefore,  they were included in the calculation of
weighted  average number of shares.  The Company's  Class A warrants do not meet
the criteria for  classification as common stock  equivalents.  Therefore,  they
were excluded from the calculation of weighted average number of shares.


NOTE 3 - INVENTORY
- - ------------------

At March 31, 1998, inventory consists of:

     New manufactured homes                       $ 4,537,876
     Used manufactured homes                          264,427
     Land and mobile home packages                    449,314
                                                  -----------
                                                  $ 5,251,617
                                                  ===========


                                       F-29


<PAGE>


                                                                             SME

                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 4 - PROPERTY AND EQUIPMENT
- - -------------------------------

At March 31, 1998, property and equipment consists of:

     Buildings  and  improvements                    $ 200,477
     Rental  mobile home units                         132,477
     Furniture  and  fixtures                           56,604
     Vehicles                                           73,559
                                                     ---------
                                                       463,117
     Less accumulated depreciation                     (60,957)
                                                     ---------
                                                     $ 402,160
                                                     =========


NOTE 5 - DEFERRED LOAN ACQUISITION COSTS
- - ----------------------------------------

The Company  incurred  costs related to the private  placement of its debentures
and the acquisition of bridge loans,  principally  during 1994. These costs have
been deferred and are being amortized over the expected life of the related debt
using a method that approximates the interest method.


NOTE 6 - GOODWILL
- - -----------------

Goodwill is being amortized over a period of forty years using the straight-line
method.


NOTE 7 - FLOORPLAN PAYABLE
- - --------------------------

The Company  maintains a $7.15  million  floorplan  line of credit with  several
finance companies for new homes inventory. These credit lines are collateralized
by the homes and personal  guarantee  from an officer of the  Company.  Interest
rates range from prime to prime + 4%,  depending on several  factors,  including
the  number  of  days a home  is on a lot.  The  finance  companies  also  offer
incentive packages back to the Company based on the volume of homes financed and
the turnover of inventory  financed.  Of the available line,  approximately $4.6
million was utilized on March 31, 1998.

For the year ended March 31, 1998,  floor plan interest  expense and  incentives
received were $404,814 and $136,460, respectively.









                                       F-30


<PAGE>


                                                                             SME

                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 8 - SUBORDINATED DEBENTURES
- - --------------------------------

During 1994, the Company  completed a private  placement of 17 debentures in the
principal  amount  of  $300,000.  The  debentures  are due  2003,  pay  interest
semi-annually  at 10.0%, and are convertible by the holders after two years into
shares of the Company's common stock at a conversion ratio of $l.25 per share.


NOTE 9 - NOTES PAYABLE
- - ----------------------

At March 31, 1998, notes payable consists of the following:

Note payable to First Union with interest at prime
  plus  1.50%,  payments  of $640.86 are due monthly
  through April 2000; secured by an automobile.                    $ 20,634


Note payable to First Union with interest at prime
  plus  1.50%,  payments  of $471.63 are due monthly
  through April 1999; secured by an automobile.                       6,133

Note  payable  to  an  individual;  principal  and
  interest at 10%,  due in monthly  installments  of
  $1,062 through November 2000; unsecured.                           29,732

Note  payable  to  McDuffie  Bank &  Trust  at 10%
  interest,  payments  of  $515.14  are due  monthly
  through  February 2002;  secured by a manufactured
  home.                                                              19,803

Note  payable  to  Regions  Bank at 10%  interest,
  payments  of  $552.56  are  due  monthly   through
  December 2001; secured by a vehicle.                               20,120

Note  payable to  McDuffie  Bank & Trust at 10.25%
  interest,  payments  of  $1,830  are  due  monthly
  through  September  2000;   secured  by  land  and
  personal guarantees of the Company president and a
  minority shareholder.                                             126,335

Debentures (See Note 8)                                             300,000

Note  payable to a  stockholder  at 10%  interest,
  principal  and accrued  interest of $38,749 due in
  September  1998;  unsecured.                                       85,000
                                                                  ---------
                                                                    607,757
Less current portion                                               (116,249)
                                                                  ---------
                                                                  $ 491,508
                                                                  =========




                                       F-31


<PAGE>


                                                                             SME

                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 9 - NOTES PAYABLE (continued)
- - ----------------------

Maturities are as follows:

            Year ending March 31,
            ---------------------
                    1999                                $ 116,249
                    2000                                   28,877
                    2001                                  153,392
                    2002                                    9,239
                    2003                                    --
             2004 and thereafter                          300,000
                                                        ---------
                                                        $ 607,757
                                                        =========


NOTE 10 - INCOME TAXES
- - ----------------------

At March 31, 1998, the income tax benefit consists of:

Current:
   Federal                                             $     --
   State                                                     --

Deferred:
   Federal                                                (98,697)
   State                                                  (17,417)
                                                       ----------
   Total                                               $ (116,114)
                                                       ==========

     The  reconciliation  of  reported  net income tax  benefit to the amount of
income tax expense that would result from applying  federal  statutory tax rates
to pretax income is as follows:

                                                 Amount              Percent
                                                 ------              -------

     Statutory federal income tax expense      $  24,734               34.0
     Valuation allowance change                 (143,663)            (197.5)
     Other                                         2,815                3.9
                                               ---------             ------
                                               $(116,114)            (159.6)
                                               =========             ======

     At March 31, 1998, the components of deferred tax assets were as follows:

     Net operating loss carryforward                     $150,063
     Allowance for uncollectible accounts                  38,816
     Inventory capitalization                              18,754
                                                         --------
                                                          207,633
     Less valuation allowance                             (55,000)
                                                         --------
                                                         $152,633
                                                         ========

     SFAS No. 109 requires a valuation  allowance to be recorded when it is more
likely  than  not  that  some or all of the  deferred  tax  assets  will  not be
realized.  At March 31,  1998,  management  has  determined  that a  reserve  is
necessary  until future  taxable  income is  sufficient to enable the Company to
realize all of its deferred tax assets.  At March 31, 1998,  the  remaining  net
operating loss  carryforward  of  approximately  $370,000 will expire in varying
amounts through 2012.

                                       F-32


<PAGE>


                                                                             SME

                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 11 - RELATED PARTY TRANSACTIONS
- - ------------------------------------

During the year ended March 31, 1998, rent of approximately  $33,000 was paid to
an officer of the Company for month-to-month leasing arrangements.  In addition,
floorplan guaranty fees of $159,019 were paid to an officer of the Company.


NOTE 12 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
- - ----------------------------------------------------------

During the year ended March 31, 1998,  cash paid for interest was  approximately
$602,000.

During the year  ending  March 31,  1998,  the  following  noncash  transactions
occurred:
                                                                   Related
                                                  Amount       Party Transaction
- - --------------------------------------------------------------------------------

Received  developed  residential land in         $  51,134           Yes
  exchange for write-off of accounts
  receivable
Received developed residential land in             210,591           Yes
  exchange for write-off of notes
  receivable
Received  developed  residential land in           130,000           Yes
  exchange for issuance of common stock
Write-off  of a note payable in exchange           485,000           No
  for issuance of common stock
Write-off  prepaid  expense  to  related           346,152           No
  cash addition to paid-in capital
Assets purchased through financing                  35,036           No
  arrangements
Received services in exchange for
  issuance of common stock                         150,000           No
Converted developed residential land
  to inventory                                     449,314           No
Converted developed residental land
  to property and equipment                        132,477           No


NOTE 13 - EQUITY INCENTIVE PLAN
- - -------------------------------

In a prior year,  the  Company  approved an Equity  Incentive  Plan  designed to
attract  and  retain  key  employees.  The  Plan,  administered  by a  committee
appointed by the Board of Directors,  provides for stock options and other stock
based awards to reward employees as the Committee deems appropriate. The Company
approved the allocation of up to 1,000,000  shares of common stock to be used in
the Plan. No stock has been awarded under this Plan.


NOTE 14 - CONCENTRATION OF CREDIT RISK
- - ---------------------------------------

The  Company  maintains  its cash  balances at several  financial  institutions.
Accounts at each institution are insured up to $100,000 by the Federal Insurance
Corporation.  At March 31, 1998, the Company's  uninsured cash balances  totaled
approximately $525,000.




                                       F-33


<PAGE>


                                                                             SME

                    APPLE HOMES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 15 - WARRANTS
- - ------------------

At March 31,  1998,  the  Company had  outstanding  Class A warrants to purchase
1,913,872  shares of the Company's common stock at $6.50 per share. The warrants
expire on December 31, 2001.


NOTE 16 - RESTATEMENTS
- - ----------------------

Certain  reclassifications  and errors of reported  amounts were  discovered  by
management of the Company  subsequent to our previously issued 1998 report dated
June 15,  1998.  Therefore,  the  financial  statements  have been  restated  as
follows:
<TABLE>
<CAPTION>

                                     March 31, 1998,                             March 31, 1998,
                                 as previously reported       Restatement         as restated
                                 ---------------------------------------------------------------
<S>                                  <C>                      <C>                 <C>
Assets                               $   8,148,089            $   183,664         $   8,331,753
Liabilities                              6,228,863                414,338             6,643,201
Minority interest in net assets
 of consolidated corporations              366,684               (287,188)               79,496
Stockholders' Equity                     1,552,542                 56,514             1,609,056
Sales                                   25,522,390                 93,145            25,615,535
Other operating expenses                 4,685,190                351,885             5,037,075
Interest expense                           521,838                 91,722               613,560
Income tax benefit                          20,165                 95,949               116,114

</TABLE>

                                      F-34

<PAGE>






               Report of Independent Certified Public Accountants


The Board of Directors
Mayfair Homes Corporation
Augusta, Georgia


We have audited the  accompanying  consolidated  balance sheets of Mayfair Homes
Corporation and Subsidiaries  (the "Company") as of March 31, 1997 and 1996, and
the related  consolidated  statements of  operations,  changes in  stockholders'
equity, and cash flows for the years then ended.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of Mayfair  Homes
Corporation  and  Subsidiaries as of March 31, 1997 and 1996, and the results of
their  operations  and their cash  flows for the years then ended in  conformity
with generally accepted accounting principles.



/s/  Cherry, Bekaert & Holland, LLP
- - -----------------------------------
Cherry, Bekaert & Holland, LLP

Augusta, Georgia
January 26, 1998

                                       F-35
<PAGE>



                   MAYFAIR HOMES CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                             March 31, 1997 and 1996


                                     ASSETS

                                                          1997           1996
                                                       ----------     ----------
Current assets
     Cash                                              $  442,645     $   67,227
     Trade receivables, net                                19,546         93,272
     Other receivables                                    245,497         65,417
     Inventory                                          3,971,444      1,790,894
     Advances to related entities                         132,999         68,900
     Current portion of notes receivable                  191,852         38,467
     Prepaid and other current assets                       8,837          6,849
     Deferred income taxes                                 29,109          3,186
                                                       ----------     ----------

              Total current assets                      5,041,929      2,134,212
                                                       ----------     ----------

Property and equipment
     Building and improvements                            172,859         74,792
     Vehicles                                              51,803          4,923
     Furniture and equipment                               48,517         31,661
                                                       ----------     ----------
                                                          273,179        111,376
     Less accumulated depreciation                         33,202         23,360
                                                       ----------     ----------

              Net property and equipment                  239,977         88,016
                                                       ----------     ----------

Developed residential land                                207,118        172,543
                                                       ----------     ----------

Other assets
     Notes receivable, net                                369,200        394,837
     Finance participation receivable, net                 18,955         23,055
     Deferred loan acquisition costs                      105,049        126,050
     Deferred underwriting costs                          355,152        154,226
     Goodwill                                             269,694        277,332
     Deferred income taxes                                  7,410          3,400
     Other                                                 14,435         68,330
                                                       ----------     ----------

              Total other assets                        1,139,895      1,047,230
                                                       ----------     ----------

              Total assets                             $6,628,919     $3,442,001
                                                       ==========     ==========





See notes to consolidated financial statements.



                                       F-36
<PAGE>






                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                       1997            1996
                                                   -----------      -----------

Current liabilities
     Floor plan payable                            $ 3,894,125      $ 1,725,992
     Accounts payable                                  500,259          140,433
     Accrued expenses                                  263,318           80,785
     Customer deposits                                 106,672           31,449
     Advances from officers                             19,000           53,082
     Current portion of notes payable                   52,085          113,561
     Short-term notes payable                          323,204           25,000
     Other liabilities                                  27,009             --
                                                   -----------      -----------

              Total current liabilities              5,185,672        2,170,302
                                                   -----------      -----------

Long-term liabilities
     Subordinated debentures                           300,000          300,000
     Notes payable                                     785,323          228,485
                                                   -----------      -----------

              Total long-term liabilities            1,085,323          528,485
                                                   -----------      -----------


Minority interest in net assets of
  consolidated subsidiary                               24,497           19,918
                                                   -----------      -----------



Stockholders' equity
     Common stock, $.002 par value;
      authorized 5,000,000 shares;
      issued and outstanding:
      1997 - 1,166,967; 1996
      1,067,849 shares                                   2,334            2,136
     Additional paid-in capital                        824,748          775,289
     Retained deficit                                 (493,655)         (54,129)
                                                   -----------      -----------

              Total stockholders' equity               333,427          723,296
                                                   -----------      -----------


              Total liabilities and
                stockholders' equity               $ 6,628,919      $ 3,442,001
                                                   ===========      ===========

                                       F-37
<PAGE>




                  MAYFAIR HOMES CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                       Years Ended March 31, 1997 and 1996


                                                      1997             1996
                                                  ------------     ------------

Sales                                             $ 15,549,376     $  8,442,228
     Less cost of sales                             12,327,352        7,028,488
                                                  ------------     ------------
              Gross profit                           3,222,024        1,413,740
                                                  ------------     ------------

Operating expenses
     Compensation                                    1,416,052          600,807
     Occupancy and vehicle                             239,413          133,931
     Advertising                                       194,151          101,667
     Insurance                                         101,373           60,779
     Taxes and licenses                                140,489           47,458
     Professional fees                                 147,383           42,510
     Depreciation and amortization                      37,980           35,982
     Other                                             828,645          211,310
                                                  ------------     ------------

              Total operating expenses               3,105,486        1,234,444
                                                  ------------     ------------

              Operating income                         116,538          179,296

Other income (expense)
     Commissions                                        36,851           30,004
     Rental and other                                   (5,332)           6,316
     Interest income                                    49,457           12,343
     Interest expense                                 (599,322)        (323,062)
                                                  ------------     ------------

              Other expense, net                      (518,346)        (274,399)
                                                  ------------     ------------

              Loss before income taxes and
                minority interest                     (401,808)         (95,103)

Income tax benefit                                      33,333            6,586

Minority interest in net income of
  consolidated subsidiary                              (71,051)          (4,917)
                                                  ------------     ------------

              Net loss                            $   (439,526)    $    (93,434)
                                                  ============     ============

Per share data:
     Weighted average number of
       shares outstanding                            1,109,669          946,264
     Net loss per share                           $       (.40)    $       (.10)
                                                  ============     ============





See notes to consolidated financial statements.

                                       F-38
<PAGE>
<TABLE>
<CAPTION>



                                    MAYFAIR HOMES CORPORATION AND SUBSIDIARIES

                                       CONSOLIDATED STATEMENTS OF CHANGES IN
                                               STOCKHOLDERS' EQUITY

                                        Years ended March 31, 1997 and 1996


                                                                                Retained
                                         Common              Paid-in            Earnings
                                          Stock              Capital            (Deficit               Total
                                          -----              -------            --------               -----

<S>                                     <C>                 <C>                 <C>                  <C>
Balance, March 31, 1994                 $   1,193           $ 315,425           $ (67,194)           $ 249,424
     Issuance of common stock                 510             212,490                --                213,000
     Net income                              --                  --               106,499              106,499
                                        ---------           ---------           ---------            ---------

Balance, March 31, 1995                     1,703             527,915              39,305              568,923
     Issuance of common stock                 433             247,374                --                247,807
     Net loss                                --                  --               (93,434)             (93,434)
                                        ---------           ---------           ---------            ---------

Balance, March 31, 1996                     2,136             775,289             (54,129)             723,296
     Issuance of common stock                 198              49,459              49,657
     Net loss                                --                  --              (439,526)            (439,526)
                                        ---------           ---------           ---------            ---------

Balance, March 31, 1997                 $   2,334           $ 824,748           $(493,655)           $ 333,427
                                        =========           =========           =========            =========

</TABLE>











See notes to consolidated financial statements.

                                                  F-39
<PAGE>
<TABLE>
<CAPTION>



                                    MAYFAIR HOMES CORPORATION AND SUBSIDIARIES

                                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   For the Years Ended March 31, 1997 and 1996

                                                                                 1997                 1996
                                                                             -----------          -----------
<S>                                                                          <C>                   <C>
Cash flows from operating activities
     Net loss                                                                $  (439,526)         $   (93,434)
     Adjustments to reconcile net loss to net cash
      provided by (used in) operating activities
         Minority interest in net income of consolidated subsidiary               71,051                4,918
         Depreciation and amortization                                            37,980               35,982
         Deferred income taxes                                                   (29,933)              (6,586)
         (Gain) loss on disposition of assets                                     (2,500)               6,055
         Professional services contributed                                        49,657                 --
         Cash provided by (used in):
              Trade receivables, net                                              73,726              (56,201)
              Other receivables                                                 (180,080)              (4,755)
              Inventory                                                       (2,180,550)             541,679
              Notes receivable, net                                             (127,748)             (25,699)
              Prepaid and other current assets                                    (1,988)              15,557
              Developed residential land                                         (34,575)                --
              Other assets, net                                                   57,995               15,321
              Floor plan payable                                               2,168,133             (634,273)
              Accounts payable                                                   359,826               31,407
              Accrued expenses                                                   182,533               12,139
              Customer deposits                                                   75,223                8,085
              Other liabilities                                                   27,009                 --
                                                                             -----------          -----------
              Net cash provided by (used in) operating activities                106,233             (149,805)
                                                                             -----------          -----------

Cash flows from investing activities
     Additions to property and equipment                                        (161,803)             (24,673)
     Advances to related entities                                                (64,099)             (64,176)
     Proceeds from disposition of property and equipment                           2,500               30,346
     Investment in sales locations opened subsequent to March 31, 1997              --                (25,000)
                                                                             -----------          -----------
              Net cash used in investing activities                             (223,402)             (83,503)
                                                                             -----------          -----------

Cash flows from financing activities
     Proceeds from issuance of common stock                                         --                108,000
     Proceeds from issuance of common stock of subsidiaries                       45,528               15,000
     Proceeds from issuance of notes payable                                     862,027              101,723
     Principal payments on notes payable                                         (68,461)             (73,102)
     Distributions paid to minority stockholders                                (111,499)                --
     Additions to deferred underwriting costs                                   (200,926)             (46,477)
     Proceeds from advances from officers                                           --                 49,515
     Repayments on advances from officers                                        (34,082)              (4,983)
                                                                             -----------          -----------
              Net cash provided by financing activities                          492,587              149,676
                                                                             -----------          -----------

              Net increase (decrease) in cash                                    375,418              (83,632)

Cash at beginning of year                                                         67,227              150,859
                                                                             -----------          -----------

Cash at end of year                                                          $   442,645          $    67,227
                                                                             ===========          ===========
See notes to consolidated financial statements.


                                                            F-40
</TABLE>

<PAGE>



                  MAYFAIR HOMES CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                             March 31, 1997 and 1996


Note 1 - The Company and Basis of Presentation

The principal  operations of Mayfair Homes Corporation and its subsidiaries (the
"Company")  consist of the sale and  installation of manufactured  homes and the
development of  residential  property for resale  primarily in the  southeastern
United  States.  The Company began  operations in October 1990. The wholly owned
subsidiaries  of Mayfair Homes  Corporation  consist of Augusta  Housing Center,
Inc. and Big Daddy's Mobile Homes,  Inc. During 1996,  Mayfair Homes Corporation
completed  the  purchase  of an 80%  interest  in  Evans-Lanier,  Inc.,  a sales
location in Thomson,  Georgia. During 1997, the Company began operations with an
80% interest in four new subsidiaries,  Apple Homes, Inc. (Augusta, Georgia), J.
C. Homes, Inc. (Augusta, Georgia), Deneaux Housing, Inc. (Waynesboro,  Georgia),
and Apple Homes of Tennessee,  Inc. (Johnson City, Tennessee).  All subsidiaries
conduct business in the name of Apple Homes. The Company extends customary trade
terms to some of its  customers,  all of whom are  located  in the  southeastern
United States.

Note 2 - Summary of Significant Accounting Policies

Consolidation
The consolidated  financial  statements  include the accounts of the Company and
its wholly  owned and majority  owned  subsidiaries.  All material  intercompany
accounts  and  transactions  are  eliminated  in  consolidation.  For 1996,  the
accounts of  Evans-Lanier,  Inc.  are  included  for the period from its date of
incorporation,  February 1, 1995,  through its year end,  December 31, 1995. The
effect on the  consolidated  financial  statements  of using a calendar year for
Evans-Lanier is not considered material.

During 1997, Evans-Lanier,  Inc. changed its fiscal year end from December 31 to
March 31 to coincide with the Company's  fiscal year end. For 1997, the accounts
of  Evans-Lanier,  Inc.  are  included for its fiscal year ended March 31, 1997.
Operations  of  Evans-Lanier,  Inc.  for the three month  period ended March 31,
1996, presented in summary form below, are immaterial and unaudited.



                               Evans-Lanier, Inc.
                             Selected Financial Data
                 For the Three Month Period Ended March 31, 1996
                 -----------------------------------------------

         Sales                                                   $691,892
         Cost of sales                                            568,364
                                                                 --------
              Gross profit                                        123,528
         Operating expenses                                        71,105
                                                                 --------

         Operating income                                          52,423
         Other expense, net                                        13,179
                                                                 --------

         Net income                                              $ 39,244
                                                                 ========

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

                                       F-41
<PAGE>



                  MAYFAIR HOMES CORPORATION AND SUBSIDIARIES

             Notes to Consolidated Financial Statements - Continued

                             March 31, 1997 and 1996


Note 2 - Summary of Significant Accounting Policies (Continued)

Fair Value of Financial Instruments
Financial  instruments  held by the  Company  at March 31,  1997  include  cash,
accounts and notes receivable,  related party advances, floor plan, accounts and
notes payable and customer deposits.  Management believes that, based on current
interest rates and terms for  comparable  financial  instruments,  the estimated
fair value of the Company's  financial  instruments  approximated their carrying
values at March 31, 1997.

Receivables
The Company uses the allowance  method to provide for  recognition  of bad debt.
The Company's  allowance  for doubtful  accounts was $76,602 and $9,371 at March
31, 1997 and 1996, respectively.

Inventory
Inventory is stated at the lower of cost or market and is  determined  using the
specific identification method.

Property and Equipment
Property and equipment are stated at cost.  Maintenance  and repairs are charged
to expense as incurred, and renewals and betterments are capitalized.  Gains and
losses on disposals are credited or charged to operations.

Depreciation and Amortization
Provisions  for  depreciation  are charged to income over the  estimated  useful
lives of the assets  using  methods  applicable  for income  tax  purposes.  The
estimated useful lives of depreciable and amortizable assets are as follows:

                                                               Years
                                                               -----
     Building and improvements                                   15
     Vehicles                                                  3 - 5
     Furniture and equipment                                   3 - 7
     Goodwill                                                    40
     Deferred loan acquisition costs                              9
     Other intangible assets                                      5

Depreciation expense for the years ended March 31, 1997 and 1996 was $21,330 and
$9,007, respectively.

Income Taxes
Income  taxes are  accounted  for using the  asset and  liability  approach  for
financial  accounting and reporting  purposes.  Under that method,  deferred tax
assets and  liabilities  are  recognized for temporary  differences  between the
financial  statement  carrying  amounts  of  assets  and  liabilities  and their
respective  tax bases.  Deferred tax assets and  liabilities  are measured using
enacted  tax rates  expected  to apply to  taxable  income in the years in which
those temporary  differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.

Net Loss Per Share
Net loss per share is  computed  by dividing  net loss by the  weighted  average
number of shares  outstanding  during the year.  The weighted  average number of
shares used in the  calculation  of net loss per share was computed based on the
actual  time  such  shares  were  outstanding  during  the year.  The  Company's
convertible debentures (see Note 10) do not meet the criteria for classification
as common stock equivalents.  Therefore, they were excluded from the calculation
of weighted average number of shares.

                                       F-42
<PAGE>



                  MAYFAIR HOMES CORPORATION AND SUBSIDIARIES

             Notes to Consolidated Financial Statements - Continued

                             March 31, 1997 and 1996


Note 2 - Summary of Significant Accounting Policies (Continued)

Future Impact of Recently Issued Accounting Standards
The  Financial  Accounting  Standards  Board  (FASB) has  issued two  accounting
standards  which the Company  will adopt during its fiscal year ending March 31,
1998.

Statement of Financial  Accounting Standards (SFAS) 128, "Earnings per Share" is
effective  for fiscal  years  ending after  December  15,  1997.  The  Statement
requires the presentation of basic earnings per share, which is calculated using
the weighted average number of outstanding  common shares,  and diluted earnings
per share,  which  incorporates  the  potential  dilution  from all  potentially
dilutive securities outstanding.

SFAS 129,  "Disclosure of Information about Capital Structure" is also effective
for fiscal years ending after December 15, 1997. This  Statement,  which applies
to all entities,  requires the disclosure of information  related to an entity's
securities, liquidation preference of preferred stock, and redeemable stock.

Management  has  determined  that  the  impact  on  the  Company's  consolidated
financial  statements  of adopting the  standards  discussed  above would not be
material.

Reclassifications
Certain  1996  amounts  have  been   reclassified   to  conform  with  the  1997
presentation. These reclassifications had no effect on net loss.

Note 3 - Notes Receivable

Notes receivable consists of the following:
                                                          1997           1996
                                                        --------      ---------

Receivable  from  individuals;   secured  by  real
estate;  due in monthly  installments of principal
and  interest at rates  ranging from 8.25% to 8.5%
with terms of 360 months                               $104,674      $    --

Receivable  from  minority  shareholders;  due  in
quarterly  payments  based on minority  interests'
share of net profits                                     56,830           --

Receivable  from an  individual;  secured  by real
estate;  due in monthly  installments of principal
and interest at 11.0% through December 19, 2006           --            50,000

Receivable  from  individuals;  secured  by mobile
homes;  due in monthly  installments  of principal
and interest at rates  ranging from 6.36% to 26.61
with terms from 12 to 240 months                        264,808        174,665



                                       F-43
<PAGE>



                  MAYFAIR HOMES CORPORATION AND SUBSIDIARIES

             Notes to Consolidated Financial Statements - Continued

                             March 31, 1997 and 1996


Note 3 - Notes Receivable (Continued)
                                                         1997          1996
                                                       --------      --------

Receivable from a company owned by a Director;
  secured by developed residential lots.
  Payments are in the form of lot releases
  upon sales of lots                                   $210,592      $218,010
                                                       --------      --------
              Total                                     636,904       442,675

     Less current portion                               191,852        38,467
                                                       --------      --------

     Long-term notes receivable                         445,052       404,208

     Less allowance for doubtful accounts              ( 75,852)     (  9,371)
                                                       --------      --------

              Net long-term notes receivable           $369,200      $394,837
                                                       ========      ========

Note 4 - Developed Residential Land

Developed  residential land primarily  consists of approximately 7 acres located
within Mayfair Acres subdivision in Richmond County, Georgia.

Note 5 - Finance Participation Receivable

The Company sold, in prior years, a portion of its mobile homes under a recourse
financing  plan. In doing so, it  participated in finance charges which are held
in reserve by the financing agent.  Payment of this reserve is contingent on the
customers  paying their  obligations.  The March 31, 1997 and 1996 receivable of
$18,955 and $23,055, respectively, is presented net of an allowance for doubtful
accounts of $19,500 and $15,990 at March 31, 1997 and 1996, respectively.

Note 6 - Deferred Loan Acquisition Costs

The Company  incurred  costs related to the private  placement of its debentures
and the acquisition of bridge loans  principally  during 1994.  These costs have
been deferred and are being amortized over the expected life of the related debt
using a method that approximates the interest method.

Note 7 - Deferred Underwriting Costs

The Company  incurred  certain  administrative  costs  related to its efforts to
raise capital, which culminated in a Rule 504 offering of common stock completed
subsequent  to year-end - See Note 19.  These  costs will be  deducted  from the
proceeds of the related offering.

Note 8 - Goodwill

Goodwill relates to the purchase of Augusta Housing Center, Inc. and Big Daddy's
Mobile Homes, Inc., the Company's wholly owned  subsidiaries,  and Evans-Lanier,
Inc., a majority owned subsidiary, and is being amortized over a period of forty
years using the straight-line method.

                                       F-44
<PAGE>

                  MAYFAIR HOMES CORPORATION AND SUBSIDIARIES

             Notes to Consolidated Financial Statements - Continued

                             March 31, 1997 and 1996


Note 8 - Goodwill (Continued)

At March 31, 1997 and 1996, goodwill and related amortization is as follows:

                                                           1997         1996
                                                         --------     --------
     Goodwill:
         Augusta Housing Center, Inc.                    $104,632     $104,632
         Big Daddy's Mobile Homes, Inc.                   138,405      138,405
         Evans-Lanier, Inc.                                50,000       50,000
                                                         --------     --------
                                                          293,037      293,037
                                                         --------     --------
     Accumulated amortization:
         Augusta Housing Center, Inc.                      10,463        7,847
         Big Daddy's Mobile Homes, Inc.                    10,380        6,920
         Evans-Lanier, Inc.                                 2,500          938
                                                         --------     --------
                                                           23,343       15,705
                                                         --------     --------

                                                         $269,694     $277,332
                                                         ========     ========
Note 9 - Other Assets

     Other assets consists of the following:  1997
     1996 Option to purchase 10 houses and lots in
     The  Timbers  subdivision,  acquired  through
     issuance of 136,000  shares of the  Company's
     stock.  Purchase  price  for the 10  homes is
     $200,000,  with  closing  to  occur  upon the
     successful completion of the public offering.       $   --       $ 39,984

     Investment   in   sales   locations    opened
     subsequent to March 31, 1996                                       25,000

     Other miscellaneous                                   14,435        3,346
                                                         --------     --------

                                                         $ 14,435     $ 68,330
                                                         ========     ========
Note 10 - Subordinated Debentures

During 1994 the Company  completed a private  placement of 17  debentures in the
principal  amount  of  $300,000.  The  debentures  are due  2003,  pay  interest
semi-annually  at 10.0%, and are convertible by the holders after two years into
shares of the Company's common stock at a conversion ratio of $1.25 per share.

Note 11 - Notes Payable

Short-term notes payable consists of the following:
                                                           1997        1996
                                                         --------   ----------

     Promissory   notes  payable  to  individuals;
     principal  and  interest  at 10% due June 30,
     1997.                                               $115,000   $     --

     Bridge loan from a  shareholder;  interest at
     10%; due on demand; unsecured.                        85,000         --

     Payable on demand to a shareholder;  interest
     at 10%; unsecured.                                    25,000       25,000

     Note payable to a shareholder;  principal and
     interest at 10% due May 14, 1997; unsecured.          25,000         --

                                       F-45
<PAGE>



                  MAYFAIR HOMES CORPORATION AND SUBSIDIARIES

             Notes to Consolidated Financial Statements - Continued

                             March 31, 1997 and 1996


Note 11 - Notes Payable (Continued)
                                                          1997         1996
                                                       ----------   ----------

     Note  payable to a bank;  due  September  24,
     1997;   interest  at  11%;  secured  by  real
     estate.                                           $   25,085    $   --

     Note  payable at a bank;  due  September  25,
     1997; interest at 9.25%; unsecured.                   48,119        --
                                                       ----------    ---------

         Short-term notes payable                      $  323,204    $  25,000
                                                       ==========    =========

Long-term liabilities consists of the following:
                                                          1997          1996
                                                       ----------    ---------
Promissory notes payable to individuals; principal
   and  interest  at 10% due  originally  June 30,
   1997.  Amount  was  subsequently  converted  to
   common stock. See Note 19.                         $   485,000    $   --
Payable  to  a  financial   institution  at  rates
   ranging  from 10.25% to 10.75%;  due in monthly
   installments through March 1998; unsecured               3,478      10,776
Bridge loan from a  shareholder;  interest at 10%;
   $50,000 due March 31, 1997; $35,000 convertible
   into common stock at $2 per share, due December
   27, 1997; unsecured                                      --         85,000
Bridge loan from a bank; principal and interest at
   10.25% payable  monthly  beginning  April 1994;
   balloon   payment   extended  to  August  1997;
   secured by land                                        146,550     173,328
Subordinated  debentures  payable to  individuals;
   interest at 10% payable semi-annually; due 2003        300,000     300,000
Mortgages to a financial institution;  interest at
   11%; due in monthly installments through August
   1997; secured by a mobile home                         117,597       8,508

Note  payable  to  an  individual;  principal  and
   interest at 10%; due in monthly installments of
   $1,062 through November 2000; unsecured                 39,729      47,711
Payable to a financial institution;  principal and
   interest  at prime  plus 1.5%  payable  monthly
   beginning May 1997 through April 2001;  secured
   by a vehicle                                            25,018        --

Payable to a financial institution;  principal and
   interest  at prime  plus 1.5%  payable  monthly
   beginning May 1997 through April 1999;  secured
   by vehicles                                             20,036        --


Payable  to a  bank;  principal  and  interest  at
   9.25%;  due  in  monthly  installments  through
   February 2001; secured by model home in Mayfair
   Acres subdivision                                        --         16,723
                                                        ---------    --------
         Total                                          1,137,408     642,046
     Less current portion                                  52,085     113,561
                                                        ---------    --------

     Long-term notes payable and
      subordinated debentures                          $1,085,323    $528,485
                                                       ==========    ========

                                       F-46
<PAGE>



                  MAYFAIR HOMES CORPORATION AND SUBSIDIARIES

             Notes to Consolidated Financial Statements - Continued

                             March 31, 1997 and 1996


Note 11 - Notes Payable (Continued)

The Company's long-term liabilities mature as follows:

     Year ending March 31,
     ---------------------
              1998                                     $   52,085
              1999                                         52,236
              2000                                         46,338
              2001                                        187,016
              2002                                         14,733
         2003 and thereafter                              785,000
                                                       ----------

                                                       $1,137,408
                                                       ==========
Note 12 - Income Taxes

Income tax expense (benefit) in 1997 and 1996 is summarized as follows:

                                                     1997             1996
                                                   --------         --------
         Current taxes:
           Federal                                $     --         $    --
           State                                        --              --
                                                  ----------       ----------
                                                        --              --
                                                  ----------       ----------
         Deferred taxes                            (  33,333)        (  6,586)
                                                  ----------       -----------

            Total income tax benefit              $(  33,333)      $ (  6,586)
                                                   =========        =========

The following is a  reconciliation  of Federal income taxes for 1997 and 1996 at
the Federal statutory rate with Federal income taxes recorded by the Company:

                                                      1997            1996
                                                   ---------        --------

     Computed income taxes at the
      Federal statutory rate                       $(136,615)       $(20,585)
     Losses not available for carryback              136,615          20,585
                                                   ---------        --------

     Income tax expense (benefit)                  $   --           $  --
                                                   =========        ========

Deferred tax assets at March 31, 1997 and 1996 consist of the following:

                                                     1997              1996
                                                   ---------        ---------

    Operating loss carryforwards                   $ 198,663        $  46,681
    Allowance for uncollectible accounts              36,519            6,586
                                                   ---------        ---------
                                                     235,182           53,267
    Less valuation allowance                        (198,663)       (  46,681)
                                                   ---------        ---------

    Net deferred tax asset                         $  36,519        $   6,586
                                                   =========        =========

At  March  31,  1997,  the  Company  had net  operating  loss  carryforwards  of
approximately $522,800, which will expire in various periods through 2012.

                                       F-47
<PAGE>



                  MAYFAIR HOMES CORPORATION AND SUBSIDIARIES

             Notes to Consolidated Financial Statements - Continued

                             March 31, 1997 and 1996


Note 13 - Operating Leases

The  Company  leases  office  space,  lot  space  and  certain  equipment  under
short-term  operating  leases.  Rent  expense  under  these  leases  amounted to
$239,413 and $110,366 in 1997 and 1996, respectively.

Note 14 - Related Party Transactions

Related party advances consist of the following:

<TABLE>
<CAPTION>
                                                                             1997                       1996
                                                                    ----------------------    -----------------------
                                                                    Receivables    Payables   Receivables    Payables
                                                                    -----------    --------   -----------    --------

<S>                                                                  <C>            <C>
     Receivable from a company owned by a Director of
      the Company                                                     $  51,134    $   --      $ 37,448      $   --
     Receivable from a partnership in which the Chairman
      of the Company owns a 50% interest                                 77,311        --        26,728          --
     Receivable from the President of the Company                         4,554        --         4,724          --
     Payable to a partnership in which the Company owns a
      minority interest                                                    --          --           --         8,165
     Payable to the wife of the Chairman of the Company                    --         9,000         --        24,917
     Payable to the President of the Company                               --        10,000         --        20,000
                                                                      ---------    --------    ---------     -------

         Total related party advances                                  $132,999    $ 19,000    $  68,900     $53,082
                                                                      =========    ========    =========     =======
</TABLE>

During  1995 the  Chairman's  wife  purchased  the  sales  office  at one of the
locations  and leases the sales office back to the Company for $625 per month on
a month-to-month basis.

Two of the  Company's  sales  offices  are owned by the  President.  The Company
leases the offices on a month-to-month basis for $1,787 per month.

Note 15 - Reverse Stock Split

On March 6, 1996 the Company's Board of Directors approved a one-for-two reverse
split of the Company's outstanding common stock. The effect of the reverse split
was to  decrease  the number of  outstanding  common  shares from  2,135,694  to
1,067,849 and to increase the par value from $.001 to $.002.

Note 16 - Supplemental Disclosure of Cash Flow Information

Cash paid for  interest  was $503,982 and $300,029 for the years ended March 31,
1997 and 1996, respectively.

During the year ended March 31, 1996,  the Company  recorded a receivable in the
amount of $4,724 related to the sale of a vehicle to the Company's President.

Asset additions through financing  arrangements  totaled $22,242 during the year
ended March 31, 1996. There were no such arrangements during 1997.

The Company recognized  goodwill in the amount of $50,000 in 1996 related to its
purchase of an 80% interest in Evans-Lanier, Inc. (see Note 1).

                                       F-48
<PAGE>


                  MAYFAIR HOMES CORPORATION AND SUBSIDIARIES

             Notes to Consolidated Financial Statements - Continued

                             March 31, 1997 and 1996


Note 16 - Supplemental Disclosure of Cash Flow Information (Continued)

During the year ended March 31, 1996, the Company  purchased a model home in its
Mayfair  Acres  subdivision  from a Director  in exchange  for 46,147  shares of
stock. The home is carried in the Company's consolidated financial statements at
March 31, 1996 at the purchase price of $54,700.  During 1997, the home was sold
to a third party.

Note 17 - Amendment of Certificate of Incorporation

On April 26,  1996 the Company  amended  its  Certificate  of  Incorporation  to
increase the authorized  capitalization to 10,000,000 shares of common stock and
to increase the par value to $.002.

Note 18 - Equity Incentive Plan

On April 26, 1996 the Company  rescinded its 1993 Stock Option Plan and approved
a new Equity  Incentive Plan designed to attract and retain key  employees.  The
Plan, administered by a committee appointed by the Board of Directors,  provides
for stock  options  and other  stock  based  awards to reward  employees  as the
Committee  deems  appropriate.  The Company  approved  the  allocation  of up to
1,000,000 shares of common stock to be used in the Plan. No shares of stock were
used in the 1993 Stock Option Plan.

Note 19 - Subsequent Events

Subsequent  to March 31, 1997 the  Company  converted  $485,000 of its  $600,000
short-term  promissory  notes to  common  stock at a rate of $2 per  share.  The
remaining $115,000 plus accrued interest was repaid by the Company.

Subsequent to March 31, 1996 the Company  completed the sale of 200,000 Units of
$5 per Unit.  Each Unit  consisted  of one share of common  stock and one Common
Stock Purchase Warrant, each to purchase one share of the Company's common stock
at $6.50 per share. The warrants are exercisable until December 31, 2001.

Note 20 - Retained earnings and minority interest

In  previously  issued  financial  statements,  dividends  of  $111,499  paid to
minority  interest  shareholders  during  the year  ended  March  31,  1997 were
incorrectly  shown as a reduction  of  retained  earnings.  In the  accompanying
financial  statements,  retained  earnings  has been  restated  to  exclude  the
minority  interest  dividends,  and  the  dividends  have  been  charged  to the
liability account "Minority interest in net assets of consolidated subsidiary."

                                       F-49

<PAGE>

                                   SIGNATURES


     Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.




                                             APPLE HOMES CORPORATION

                                             By: /s/  E. Samuel Evans
                                                 -------------------------------
                                                 E. Samuel Evans, President

                                             Date: July 15, 1999
                                                   -----------------------------



                                      (25)





                                                                    EXHIBIT 3(i)


                          CERTIFICATE OF INCORPORATION
                          ----------------------------

                                       OF

                              PLAM PROPERTIES, INC.
                              ---------------------

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

     The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:

     FIRST: The name of the corporation (hereinafter called the "corporation")
is

                              PLAM PROPERTIES, INC.

     SECOND: The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 229 South State
Street, City of Dover, County of Kent; and the name of the registered agent of
the corporation in the State of Delaware is The Prentice-Hall Corporation
System, Inc.

     THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.

     FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is One Hundred Million (100,000,000). The par value of
each of such shares is One Mil ($.001). All such shares are of one class and are
shares of Common Stock.

     FIFTH: The name and the mailing address of the incorporator are as follows:

      NAME                              MAILING ADDRESS
      ----                              ---------------

T.M. Bonovich                   229 South State Street, Dover, Delaware

     SIXTH: The corporation is to have perpetual existence.

     SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable

                                      E-1

<PAGE>

jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of section 291 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization arrangement,
the said compromise or arrangement and the said reorganization shall, if
sanctioned by the court to which the said application has been made, be binding
on all the creditors or class of creditors, and/or on all the stockholders or
class of stockholders, of this corporation, as the case may be, and also on this
corporation.

     EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation and regulation
of the powers of the corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:

          1.   The management of the business and the conduct of the affairs of
               the corporation shall be vested in its Board of Directors. The
               number of the directors, which shall constitute the whole Board
               of Directors, shall be fixed by, or in the manner provided in,
               the By-Laws. The phrase "whole Board" and the phrase "total
               number of directors" shall be deemed to have the same meaning, to
               wit, the total number of directors which the corporation would
               have if there were no vacancies. No election of directors need be
               by written ballot.

          2.   After the original or other By-Laws of the corporation have been
               adopted, amended, or repealed, as the case may be, in accordance
               with the provisions of Section 109 of the General Corporation Law
               of the State of Delaware, and, after the corporation has received
               any payment for any of its stock, the power to adopt, amend, or
               repeal the By-Laws of the corporation may be exercised by the
               board of Directors of the corporation; provided, however, that
               any provision for the classification of directors of the
               corporation for staggered terms pursuant to the provisions of
               subsection (d) of Section 141 of the General Corporation Law of
               the State of Delaware shall be set forth in an initial By-Law or
               in a By-Law adopted by the stockholders entitled to vote of the
               corporation unless provisions for such classification shall be
               set forth in this certificate of incorporation.

          3.   Whenever the corporation shall be authorized to issue only one
               class of stock, each outstanding share shall entitle the holder
               thereof to notice of, and the right to vote at, any meeting of
               stockholders. Whenever the corporation shall be authorized to

                                      E-2

<PAGE>

               issue more than one class of stock, no outstanding share of any
               class of stock which is denied voting power under the provisions
               of the certificate of incorporation shall entitle the holder
               thereof to the right to vote at any meeting of stockholders
               except as the provisions of paragraph (2) of subsection (b) of
               section 242 of the General Corporation Law of the State of
               Delaware shall otherwise require; provided, that no share of any
               such class which is otherwise denied voting power shall entitle
               the holder thereof to vote upon the increase or decrease in the
               number of authorized shares of said class.

     NINTH: The personal liability of the directors of the corporation is hereby
eliminated to the fullest extent permitted by paragraph (7) of subsection (b) of
Section 102 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented.

     TENTH: The corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented, indemnify any and all persons whom it shall have power
to indemnify under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section, and the
indemnification provided forherein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-Law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.

     ELEVENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.

Signed on April 17, 1989.


                                             /S/  T.M. BONOVICH
                                             -----------------------------------
                                             T. M. Bonovich
                                             Incorporator

                                      E-3
<PAGE>



                                STATE OF DELAWARE


                          OFFICE OF SECRETARY OF STATE

     I, Michael Harkins, Secretary of State of the State of Delaware, do hereby
certify that the above and foregoing is a true and correct copy of Certificate
of Incorporation of the "PLAM PROPERTIES, INC.", as received and filed in this
office the seventeenth day of April, 1989, at 9 o'clock A.M.





                                                  IN  TESTIMONY   WHEREOF,  I
                                                  have  hereunto  set my hand
                                                  and official  seal at Dover
                                                  this   seventeenth  day  of
                                                  April  in the  year  of our
                                                  Lord  one  thousand,   nine
                                                  hundred and eighty-nine.

                                                  MICHAEL HARKINS
                                                  Secretary of State

                                                  RICHARD L. TEMPLETON
                                                  Assistant Secretary of State


                                      E-4
<PAGE>




                            CERTIFICATE OF AMENDMENT
                                       OF
                          CERTIFICATE OF INCORPORATION
                                       OF
                              PLAM PROPERTIES, INC.

IT IS HEREBY CERTIFIED THAT:

     1. The name of the corporation (hereinafter called the "corporation") is
PLAM PROPERTIES, INC.

     2. The certificate of incorporation is hereby amended by striking out
Articles FIRST and FOURTH thereof and by substituting in lieu of said Articles
the following new Articles:

     FIRST: The name of the corporation (hereinafter called the "corporation")
is MAYFAIR HOMES CORPORATION.

     FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is Five Million (5,000,000). The par value of each of
such shares is ONE Mil ($.001). All such shares are of one class and are shares
of common stock.

     3. The amendments of the certificate of incorporation herein certified have
been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.

     Signed and attested to on August 30, 1993.



[CORPORATE SEAL]


                                            /S/ E. SAMUEL EVANS
                                            ------------------------------------
                                            E. Samuel Evans, President


Attest:


/S/ ROBERT S. WILSON
- - ---------------------------
Robert S. Wilson, Secretary

                                      E-5
<PAGE>


                               State of Delaware

                        Office of the Secretary of State

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


     I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO

HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF

AMENDMENT OF "PLAM PROPERTIES, INC." FILED IN THIS OFFICE ON THE SECOND DAY OF

SEPTEMBER, A.D. 1993, AT 9 O'CLOCK A.M.


     A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO KENT COUNTY

RECORDER OF DEEDS FOR RECORDING.



                                          /S/  WILLIAM T. QUILLEN
                                          --------------------------------------
                                          William T. Quillen, Secretary of State

                                                       AUTHENTICATION:  #4042062

                                                               DATE:  09/02/1993


753245036

                                      E-6

<PAGE>

                                                              Secretary of State
                                                        Division of Corporations
                                                       Filed 09:00 AM 09/03/1996
                                                             960255233   2193647

                            CERTIFICATE OF AMENDMENT
                                       OF
                          CERTIFICATE OF INCORPORATION
                                       OF
                            MAYFAIR HOMES CORPORATION

IT IS HEREBY CERTIFIED THAT:

     1. The name of the corporation (hereinafter called the "corporation") is
MAYFAIR HOMES CORPORATION.

     2. The certificate of incorporation is hereby amended by striking out
Article FOURTH thereof and by substituting in lieu of said Article the following
new Article:

     FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is Ten Million (10,000,000). The par value of each of
such shares is Two Mils ($.002). All such shares are of one class and are shares
of common stock.

     3. The amendment of the certificate of incorporation herein certified has
been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.

     Signed and attested to on August 23, 1996.

[CORPORATE SEAL]

                                               /S/ E. SAMUEL EVANS
                                               ---------------------------------
                                               E. Samuel Evans, President


Attest:


/S/ ROBERT S. WILSON
- - ---------------------------
Robert S. Wilson, Secretary

                                      E-7
<PAGE>



                                State of Delaware

                        Office of the Secretary of State

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

     I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY

CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT

OF "MAYFAIR HOMES CORPORATION", FILED IN THIS OFFICE ON THE THIRD DAY OF

SEPTEMBER, A.D. 1996 AT 9 O'CLOCK A.M.


     A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE

COUNTY RECORDER OF DEEDS FOR RECORDING.



                                          /S/  EDWARD J. FREEL
                                          --------------------------------------
                                          Edward J. Freel, Secretary of State
                                                        AUTHENTICATION:  8094087
                                                                 DATE:  09-06096

2193647   8100

960255233


                                      E-8
<PAGE>


                            CERTIFICATE OF AMENDMENT
                                       OF
                          CERTIFICATE OF INCORPORATION
                                       OF
                            MAYFAIR HOMES CORPORATION

IT IS HEREBY CERTIFIED THAT:

     1. The name of the corporation (hereinafter called the "corporation") is
MAYFAIR HOMES CORPORATION.

     2. The certificate of incorporation is hereby amended by striking out
Article FIRST thereof and by substituting in lieu of said Article the following
new Article:

     FIRST: The name of the corporation (hereinafter called the "corporation")
is APPLE HOMES CORPORATION.

     3. The amendment of the certificate of incorporation herein certified has
been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.

     Signed and attested to on February 18, 1998.


[CORPORATE SEAL]


                                               /S/ E. SAMUEL EVANS
                                               ---------------------------------
                                               E. Samuel Evans, President


Attest:


/S/ ROBERT S. WILSON
- - ---------------------------
Robert S. Wilson, Secretary

                                      E-9

<PAGE>



Secretary of State
Corporations Division
Suite 315, West Tower
2 Martin Luther King Jr. Dr.
Atlanta, GA 30334-1530


                                        DOCKET NUMBER         =        980580242
                                        CONTROL NUMBER        =          9013010
                                        DATE AUTHORIZED       =       07-09-1990
                                        JURISDICTION          =         DELAWARE
                                        EFFECTIVE DATE        =       02-18-1998
                                        REFERENCE             =             0047
                                        PRINT DATE            =       02-27-1998
                                        FORM NUMBER           =              626


Jim Clark
3633 Wheeler Road
Suite 140
Augusta, GA 30909

                AMENDED CERTIFICATE OF AUTHORITY WITH NAME CHANGE

     I, Lewis A Massey, the Secretary of State and the corporation Commissioner
of the State of Georgia, do hereby certify under the seal of my office that

                         MAYFAIR HOMES CORPORATION (DEL)
                          A FOREIGN PROFIT CORPORATION

Incorporated under the laws of the jurisdiction stated above and authorized to
transact business in Georgia on the date stated above, has amended its
application to transact business by the filing of an amendment changing its name
to

                       APPLE HOMES CORPORATION (DELAWARE)

And by paying of fees as required by Title 14 of the Official Code of Georgia
Annotated. Attached hereto is a true and correct copy of said application.

WITNESS my hand and official seal in the City of Atlanta and the State of
Georgia on the date set forth above.



                                              Lewis A. Massey
                                              Secretary of State



                                      E-10




                                                                   EXHIBIT 3(ii)


                                     BYLAWS
                                     ------

                                       OF

                             APPLE HOMES CORPORATION
                             -----------------------

                            (a Delaware corporation)

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

                                    ARTICLE I

                                  STOCKHOLDERS

     1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in the
corporation shall be signed by, or in the name of, the corporation by the
Chairman or Vice-Chairman of the Board of Directors, if any, or by the President
or a Vice-President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.

     Whenever the corporation shall be authorized to issue more than one class
of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.

     The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.

                                      E-11

<PAGE>



     2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the General
Corporation law, the Board of Directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a reasonable
time after the issuance or transfer of any uncertificated shares, the
corporation shall send to the registered owner thereof any written notice
prescribed by the General Corporation Law.

     3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.

     4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and, in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.

     5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of

                                      E-12

<PAGE>

stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the Board of Directors may fix
a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of Directors. If no
record date has been fixed by the board of directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of Directors is required by
the General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.

     6. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more then
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any provision of law
may otherwise require.

                                      E-13

<PAGE>


     7. STOCKHOLDER MEETINGS.

     -TIME. The annual meeting shall be held on the date and at the time fixed,
     from time to time, by the directors, provided, that the first annual
     meeting shall be held on a date within thirteen months after the
     organization of the corporation, and each successive annual meeting shall
     be held on a date within thirteen months after the date of the preceding
     annual meeting. A special meeting shall be held on the date and at the time
     fixed by the directors.

     -PLACE. Annual meetings and special meetings shall be held at such place,
     within or without the State of Delaware, as the directors may, from time to
     time, fix. Whenever the directors shall fail to fix such place, the meeting
     shall be held at the registered office of the corporation in the State of
     Delaware.

     -CALL. Annual meetings and special meetings may be called by the directors
     or by any officer instructed by the directors to call the meeting.

     -NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be given,
     stating the place, date, and hour of the meeting and stating the place
     within the city or other municipality or community at which the list of
     stockholders of the corporation may be examined. The notice of an annual
     meeting shall state that the meeting is called for the election of
     directors and for the transaction of other business which may properly come
     before the meeting, and shall (if any other action which could be taken at
     a special meeting is to be taken at such annual meeting) state the purpose
     or purposes. The notice of a special meeting shall in all instances state
     the purpose or purposes for which the meeting is called. The notice of any
     meeting shall also include, or be accompanied by, any additional
     statements, information, or documents prescribed by the General Corporation
     Law. Except as otherwise provided by the General Corporation law, a copy of
     the notice of any meeting shall be given, personally or by mail, not less
     than ten days nor more than sixty days before the date of the meeting,
     unless the lapse of the prescribed period of time shall have been waived,
     and directed to each stockholder at his record address or at such other
     address which he may have furnished by request in writing to the Secretary
     of the corporation. Notice by mail shall be deemed to be given when
     deposited, with postage thereon prepaid, in the United States Mail. If a
     meeting is adjourned to another time, not more than thirty days hence,
     and/or to another place, and if an announcement of the adjourned time
     and/or place is made at the meeting, it shall not be necessary to give
     notice of the adjourned meeting unless the directors, after adjournment,
     fix a new record date for the adjourned meeting. Notice need not be given
     to any stockholder who submits a written waiver of notice signed by him
     before or after the time stated therein. Attendance of a stockholder at a
     meeting of stockholders shall constitute a waiver of notice of such
     meeting, except when the stockholder attends the meeting for the express

                                      E-14

<PAGE>

     purpose of objecting, at the beginning of the meeting, to the transaction
     of any business because the meeting is not lawfully called or convened.
     Neither the business to be transacted at, nor the purpose be specified in
     any written waiver of notice.

     -STOCKHOLDER LIST. The officer who has charge of the stock ledger of the
     corporation shall prepare and make, at least ten days before every meeting
     of stockholders, a complete list of the stockholders, arranged in
     alphabetical order, and showing the address of each stockholder and the
     number of shares registered in the name of each stockholder. Such list
     shall be open to the examination of any stockholder, for any purpose
     germane to the meeting, during ordinary business hours, for a period of at
     least ten days prior to the meeting, either at a place within the city or
     other municipality or community where the meeting is to be held, which
     place shall be specified in the notice of the meeting, or if not so
     specified, at the place where the meeting is to be held. The list shall
     also be produced and kept at the time and place of the meeting during the
     whole time thereof, and may be inspected by any stockholder who is present.
     The stock ledger shall be the only evidence as to who are the stockholders
     entitled to examine the stock ledger, the list required by this section or
     the books of the corporation, or to vote at any meeting of stockholders.

     -CONDUCT OF MEETING. Meetings of the stockholders shall be presided over by
     one of the following officers in the order of seniority and if present and
     acting-the Chairman of the Board, if any, the Vice-Chairman of the Board,
     if any, the President, a Vice-President, or, if none of the foregoing is in
     office and present and acting, by a chairman to be chosen by the
     stockholders. The Secretary of the corporation, or in his absence, an
     Assistant Secretary, shall act as secretary of every meeting, but if
     neither the Secretary nor an Assistant Secretary is present the Chairman of
     the meeting shall appoint a secretary of the meeting.

     -PROXY REPRESENTATION. Every stockholder may authorize another person or
     persons to act for him by proxy in all matters in which a stockholder is
     entitled to participate, whether by waiving notice of any meeting, voting
     or participating at a meeting, or expressing consent or dissent without a
     meeting. Every proxy must be signed by the stockholder or by his
     attorney-in-fact. No proxy shall be voted or acted upon after three years
     from its date unless such proxy provides for a longer period. A duly
     executed proxy shall be irrevocable if it states that it is irrevocable
     and, if, and only as long as, it is coupled with an interest sufficient in
     law to support an irrevocable power. A proxy may be made irrevocable
     regardless of whether the interest with which it is coupled is an interest
     in the stock itself or an interest in the corporation generally.

     -INSPECTORS. The directors, in advance of any meeting, may, but need not,
     appoint one or more inspectors of election to act at the meeting or any
     adjournment thereof. If an inspector or inspectors are not appointed, the
     person presiding at the meeting may, but need not, appoint one or more
     inspectors. In case any person who may be appointed as an inspector fails
     to appear or act, the vacancy may be filled by appointment made by the

                                      E-15

<PAGE>

     directors in advance of the meeting or at the meeting by the person
     presiding thereat. Each inspector, if any, before entering upon the
     discharge of his duties, shall take and sign an oath faithfully to execute
     the duties of inspectors at such meeting with strict impartiality and
     according to the best of his ability. The inspectors, if any, shall
     determine the number of shares of stock outstanding and the voting power of
     each, the shares of stock represented at the meeting, the existence of a
     quorum, the validity and effect of proxies, and shall receive votes,
     ballots, or consents, hear and determine all challenges and questions
     arising in connection with the right to vote, count and tabulate all votes,
     ballots, or consents, determine the result, and do such acts as are proper
     to conduct the election or vote with fairness to all stockholders. On
     request of the person presiding at the meeting, the inspector or
     inspectors, if any, shall make a report in writing of any challenge,
     question, or matter determined by him or them and execute a certificate of
     any fact found by him or them.

     -QUORUM. The holders of a majority of the outstanding shares of stock shall
     constitute a quorum at a meeting of stockholders for the transaction of any
     business. The stockholders present may adjourn the meeting despite the
     absence of a quorum.

     -VOTING. Each share of stock shall entitle the holders thereof to one vote.
     Directors shall be elected by a plurality of the votes of the shares
     present in person or represented by proxy at the meeting and entitled to
     vote on the election of directors. Any other action shall be authorized by
     a majority of the votes cast except where the General Corporation Law
     prescribes a different percentage of votes and/or a different exercise of
     voting power, and except as may be otherwise prescribed by the provisions
     of the certificate of incorporation and these By-Laws. In the election of
     directors, and for any other action, voting need not be by ballot.

     8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the General
Corporation Law to be taken at any annual or special meeting of stockholders, or
any action which may be taken at any annual or special meeting of stockholders,
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having no less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
Action taken pursuant to this paragraph shall be subject to the provisions of
Section 228 of the General Corporation Law.

                                      E-16

<PAGE>

                                   ARTICLE II
                                   ----------

                                    DIRECTORS
                                    ---------

     1. FUNCTION AND DEFINITION. The business and affairs of the corporation
shall be managed by or under the direction of the Board of Directors of the
corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.

     2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of one person. Thereafter the number of
directors constituting the whole board shall be at least one. Subject to the
foregoing limitation and except for the first Board of Directors, such number
may be fixed from time to time by action of the stockholders or of the
directors, or, if the number is not fixed, the number shall be one. The number
of directors may be increased or decreased by action of the stockholders or of
the directors.

     3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until their
successors are elected and qualified or until their earlier resignation or
removal. Any director may resign at any time upon written notice to the
corporation. Thereafter, directors who are elected at an annual meeting of
stockholders, and directors who are elected in the interim to fill vacancies and
newly created directorships, shall hold office until the next annual meeting of
stockholders and until their successors are elected and qualified or until their
earlier resignation or removal. Except as the General Corporation Law may
otherwise require, in the interim between annual meetings of stockholders or of
special meetings of stockholders called for the election of directors and/or for
the removal of one or more directors and for the filling of any vacancy in that
connection, newly created directorships and any vacancies in the Board of
Directors, including unfilled vacancies resulting from the removal of directors
for cause or without cause, may be filled by the vote of a majority of the
remaining directors then in office, although less than a quorum, or by the sole
remaining director.

     4. MEETINGS.

     -TIME. Meetings shall be held at such time as the Board shall fix, except
     that the first meeting of a newly elected Board shall be held as soon after
     its election as the directors may conveniently assemble.

     -PLACE. Meetings shall be held at such place within or without the State of
     Delaware as shall be fixed by the Board.

     -CALL. No call shall be required for regular meetings for which the time
     and place have been fixed. Special meetings may be called by or at the
     direction of the Chairman of the Board, if any, the Vice-Chairman of the
     Board, if any, of the President, or of a majority of the directors in
     office.

                                      E-17

<PAGE>


     -NOTICE OF ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for
     regular meetings for which the time and place have been fixed. Written,
     oral, or any other mode of notice of the time and place shall be given for
     special meetings in sufficient time for the convenient assembly of the
     directors thereat. Notice need not be given to any director or to any
     member of a committee of directors who submits a written waiver of notice
     signed by him before or after the time stated therein. Attendance of any
     such person at a meeting shall constitute a waiver of notice of such
     meeting, except when he attends a meeting for the express purpose of
     objecting, at the beginning of the meeting, to the transaction of any
     business because the meeting is not lawfully called or convened. Neither
     the business to be transacted at, nor the purpose of, any regular or
     special meeting of the directors need be specified in any written waiver of
     notice.

     -QUORUM AND ACTION. A majority of the whole Board shall constitute a quorum
     except when a vacancy or vacancies prevents such majority, whereupon a
     majority of the directors in office shall constitute a quorum, provided,
     that such majority shall constitute at least one-third of the whole Board.
     A majority of the directors present, whether or not a quorum is present,
     may adjourn a meeting to another time and place. Except as herein otherwise
     provided, and except as otherwise provided by the General Corporation Law,
     the vote of the majority of the directors present at a meeting at which a
     quorum is present shall be the act of the Board. The quorum and voting
     provisions herein stated shall not be construed as conflicting with any
     provisions of the General Corporation Law and these By-Laws which govern a
     meeting of directors held to fill vacancies and newly created directorships
     in the Board or action of disinterested directors. Any member or members of
     the Board of Directors or of any committee designated by the Board, may
     participate in a meeting of the Board, or any such committee, as the case
     may be, by means of conference telephone or similar communications
     equipment by means of which all persons participating in the meeting can
     hear each other.

     -CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present
     and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of
     the Board, if any and if present and acting, or the President, if present
     and acting, or any other director chosen by the Board, shall preside.

     5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the General
Corporation law, any director or the entire Board of Directors may be removed,
with or without cause, by the holders of a majority of the shares then entitled
to vote at an election of directors.

     6. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may

                                      E-18

<PAGE>

replace any absent or disqualified member at any meeting of the committee. In
the absence or disqualification of any member of any such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation with the exception of
any authority the delegation of which is prohibited by Section 141 of the
General Corporation Law, and may authorize the seal of the corporation to be
affixed to all papers which may require it.

     7. WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.


                                   ARTICLE III
                                   -----------

                                    OFFICERS
                                    --------


     1. OFFICERS. The officers of the corporation shall consist of a President,
a Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by
the Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board,
an Executive Vice-President, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
with such titles as the resolution of the Board of Directors choosing them shall
designate. Except as may otherwise be provided in the resolution of the Board of
Directors choosing him, no officer other than the Chairman or Vice-Chairman of
the board, if any, need be a director. Any number of offices may be held by the
same person, as the directors may determine.

     2. TERM. Unless otherwise provided in the resolution choosing him, each
officer shall be chosen for a term which shall continue until the meeting of the
Board of Directors following the next annual meeting of stockholders and until
his successor shall have been chosen and qualified.

     3. AUTHORITY AND DUTIES. All officers of the corporation shall have such
authority and perform such duties in the management and operation of the
corporation as shall be prescribed in the resolutions of the Board of Directors
designating and choosing such officers and prescribing their authority and
duties, and shall have such additional authority and duties as are incident to
their office except to the extent that such resolutions may be inconsistent
therewith. The Secretary or an Assistant Secretary of the corporation shall
record all of the proceedings of all meetings and actions in writing of
stockholders, directors, and committees of directors, and shall exercise such

                                      E-19

<PAGE>

additional duties as the Board shall assign to him. Any officer may be removed,
with or without cause, by the Board of Directors. Any vacancy in any office may
be filled by the Board of Directors.

                                   ARTICLE IV
                                   ----------

                                 CORPORATE SEAL
                                 --------------

The  corporate  seal  shall  be in such  form as the  Board of  Directors  shall
prescribe.

                                    ARTICLE V
                                    ---------

                                   FISCAL YEAR
                                   -----------

The  fiscal  year of the  corporation  shall be fixed,  and shall be  subject to
change, by the Board of Directors.

                                   ARTICLE VI
                                   ----------

                              CONTROL OVER BY-LAWS
                              --------------------

Subject to the provisions of the certificate of incorporation and the provisions
of the General Corporation Law, the power to amend, alter, or repeal these
By-Laws and to adopt new By-Laws may be exercised by the Board of Directors or
by the stockholders.

                                      E-20





                                                                    EXHIBIT 10.1



     EMPLOYMENT AGREEMENT, (the "Agreement") effective as of the 26th day of
April, 1996 between Mayfair Homes Corporation, a Delaware corporation with
offices at 3633 Wheeler Road, Suite 140, Augusta, Georgia 30909 (the "Company"),
and E. Samuel Evans ("Employee"). The Company and Employee are hereinafter
referred to collectively as the "Parties and sometimes individually as a
"Party."

     WHEREAS, prior to the date hereof, employee has been an employee of the
Company; and

     WHEREAS, the Company desires to induce Employee to continue in the employ
of the Company for the period provided in this Agreement, and Employee is
willing to accept such employment with the company on a full-time basis, all in
accordance with the terms and conditions hereinafter set forth.

     NOW, THEREFORE, for and in consideration of the premises and the mutual
promises and covenants contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties agree as follows:

     1.   Employment. The Company hereby employs Employee, and Employee hereby
          accepts such employment with the Company, for the period set forth in
          Section 3 of this Agreement, all upon the terms and conditions
          hereinafter set forth.

     2.   Effective Date. This Agreement shall be effective as of the 26th day
          of April, 1996.

     3.   Term of Employment. Unless sooner terminated pursuant to Section 6 of
          this Agreement, the term of Employee's employment hereunder shall be
          for a period of two years from the Effective Date. At the end of such
          initial two-year term, this Agreement shall be extended for subsequent
          additional one year terms on each anniversary of the Effective Date
          unless either Party notifies the other not less than 90 days prior to
          the end of the term then in effect that it will not renew this
          Agreement at the end of the then current term.

     4.   Duties. Employee shall perform and discharge such services and duties
          as shall be specified (a) in the Company's by-laws from time to time
          in effect for the office or offices now or hereafter held by Employee
          or (b) assigned to Employee by the Company's Board of Directors.
          Employee further agrees during the term of this Agreement to devote
          Employee's full business time and energies to the performance of
          Employee's duties hereunder and to use Employee's best efforts to
          promote the interests of the Company and its affiliates. Employee
          shall report to the Board of Directors of the company.

                                      E-21

<PAGE>


     5. Compensation. As full compensation for Employee's services hereunder:

     (a)  Salary. The Company will pay Employee a base salary of $96,000 per
          year ("Base Salary"), payable in accordance with the Company's
          standard payroll procedure, subject to increase (but not decrease)
          from time to time by the Board of Directors in their discretion.

     (b)  Bonus. Employee may be entitled to receive an annual performance bonus
          in such amount and based upon such performance criteria as shall be
          determined by the Board of Directors.

     (c)  Benefits. Employee shall be entitled to participate, to the extent of
          employees of the Company of similar status, in any pension, retirement
          or profit-sharing plan, 401(k) plan, bonus, incentive, group
          insurance, medical or other benefits made available by the Company to
          its employees generally, in accordance with the provisions of any such
          plans as the same may be in effect on or after the date hereof.

     (d)  Reimbursement. Employee shall be entitled to reimbursement for all
          items of expense reasonably and necessarily incurred by him on behalf
          of the Company and which are directly related to the Company's
          business. Reimbursement for such expenses will be made pursuant to,
          and will be limited by, the Company's policy of reimbursing employee's
          business expenses generally.

     (e)  Automobile. Employee shall be entitled to reimbursement for up to
          $1500.00 monthly expenses associated with maintaining an automobile
          which may be used by Employee.

     (f)  Other Benefits. Employee shall be entitled to such vacation time,
          perquisites and other fringe benefits as made available to the
          Company's other senior executives from time to time.

     The Company shall be entitled to deduct and/or withhold from all payments
hereunder applicable state and federal income taxes, unemployment taxes, FICA
contributions and any other lawful and required deductions.

     6. Termination.

     (a)  This Agreement shall terminate as provided in Section 3 hereof and may
          be earlier terminated by the Company immediately in the event of:

          i.   the willful failure by Employee to perform the duties set forth
               in this Agreement (provided, that written notice of such failure
               shall have been given to Employee prior to termination and that
               such failure shall not have been remedied within a reasonable
               time after such notice shall have been given), including but not
               limited to, the breach of Sections 7 and 8 hereof;

                                      E-22

<PAGE>


          ii.  the willful failure by Employee to observe or perform any
               reasonable rule or order of the Company's Board of Directors
               which is consistent with such duties;

          iii. the conviction of Employee for a felony or a misdemeanor
               involving moral turpitude;

          iv.  gross negligence or willful misconduct of Employee in connection
               with Employee's duties hereunder;

          v.   the death or permanent disability (being defined for the purposes
               hereof as Employee's inability to perform Employee's duties
               hereunder for a period of 150 days whether or not consecutive,
               occurring within any period of 12 consecutive months) of
               Employee.

     (b)  In addition to its right to terminate this Employment Agreement for
          cause pursuant to Section 6(a), the Company may terminate this
          Employment Agreement without cause at any time upon not less than 30
          days' prior written notice. Following such termination without cause,
          the Company shall continue to pay to Employee, as a severance payment,
          an aggregate amount equal to one years' Base Salary as set forth in
          Section 5(a) hereof, payable on the terms set forth therein, together
          with any bonus to which Employee may be entitled pursuant to section
          5(b) hereof. In addition, the Company shall pay Employee a lump sum
          cash amount equal to the accrued amounts of Employee's vacation, and
          Employee shall continue to receive all medical or other benefits
          received or receivable by the employee as of the date of termination,
          for a period of six months after such termination. The Parties
          acknowledge that the Company may satisfy its severance obligations set
          forth in this Section 6(b) by the single payment upon such termination
          of a mutually agreeable discounted amount. In addition, the Company
          agrees to satisfy any liability and/or extinguish any personal
          guarantee incurred by such Employee concerning wholesale floor
          planning.

     (c)  Upon any termination of Employee's employment hereunder, whether
          pursuant to Section 3 or this Section 6 or otherwise, all payments to
          Employee or for Employee's benefit under this Agreement shall cease,
          except for all fixed salary and other vested benefits which have
          accrued through the date of such termination and not theretofore been
          paid and except for the severance payments provided for in Section
          6(b) hereof, which shall continue to be paid to Employee (or
          Employee's executor or legal representative in the event of Employee's
          death) as set forth in such Section.

     7.   Confidentiality. Employee recognizes that, by reason of his employment
          hereunder, he may acquire confidential information and trade secrets
          concerning the operation of the Company, the use or disclosure of

                                      E-23

<PAGE>

          which could cause the Company substantial loss and damages which could
          not be readily calculated and for which no remedy at law would be
          adequate. Accordingly, Employee covenants and agrees with the Company
          that he will not, either during the term of his employment hereunder
          and for a period of one year after the expiration or termination of
          this Agreement, disclose, furnish or make accessible to any person,
          firm or corporation (except (i) in the ordinary course of business in
          performance of Employee's obligations to the Company thereunder or
          (ii) when required to do so by a court of competent jurisdiction, by
          any governmental, administrative or legislative agency having
          supervisory authority over the business of the Company or (iii) with
          the prior written consent of the Company pursuant to authority granted
          by a resolution of the Board of Directors) any confidential
          information that Employee has learned or may learn by reason of his
          association with the Company. As used hereunder, the term
          "confidential information" shall include, without limitation,
          information not previously disclosed to the public or to the trade by
          the Company with respect to the business or affairs of the Company,
          including without limitation, information relating to business
          opportunities; customer lists, price lists, trade secrets, systems,
          techniques, procedures, methods, inventions, facilities, financial
          information, business plan or prospects.

     8.   Non-Competition. If Employee's employment hereunder is terminated for
          any reason, the Employee agrees that, without the prior written
          consent of the Company, for a period of one year after such
          termination, (a) he shall not, directly or indirectly, either as
          principal, manger, agent, consultant, officer, stockholder, partner,
          investor, lender or employee or in any other capacity, carry on, be
          engaged in or have any financial interest in, any business which is
          directly in competition with the business of company and (b) he shall
          not, on his own behalf or on behalf of any person, firm or company,
          indirectly or indirectly, (i) persuade any entity with which the
          company has a contractual relationship on the date of such termination
          or during the six-month period prior to the termination to cease
          retaining or refrain from obtaining the Company to perform services
          for or on behalf of such entity or to reduce the extent to which such
          services are performed by the company for or on behalf of such
          entities or to retain the Employee or entity with which the Employee
          is in any way affiliated to perform such services for or on behalf of
          such entity or its customers; or (ii) solicit or offer employment to
          any person who has been employed by the company at any time during the
          12 months immediately preceding such termination to leave the employ
          of the Company and become employed by the Employee or any entity with
          which the Employee is in any way affiliated.

     9.   Miscellaneous.

     (a)  This Agreement shall be binding upon and inure to the benefit of the
          Parties and each of their respective successors, assigns, heirs and
          legal representatives; provided, however, that Employee may not assign
          or delegate Employee's obligations, responsibilities and duties
          hereunder.

     (b)  All notices, demands or other communications required or permitted to
          be given in connection with this Agreement shall be given in writing,
          shall be transmitted to the appropriate Party by hand delivery, by
          certified mail, return receipt requested, postage prepaid or by
          telegram, telex or other electronic means and shall be addressed to
          the Company at the Company's address shown on the first page hereof or
          to Employee at Employee's address designated on the signature page
          hereof. A Party may designate by written notice given to the other
          Party a new address to which any notice, demand or other communication
          hereunder shall thereafter be given. Each notice, demand or other
          communication transmitted in the manner described in this Section 9(b)
          shall be deemed to have been given and received for all purposes at
          the time it shall have been (i) delivered to the addressee as
          indicated by the return receipt (if transmitted by mail), the
          affidavit of the messenger (if transmitted by hand delivery) or the
          answer back or call back (if transmitted by telegram, telex or other
          electronic means) or (ii) presented for delivery during normal
          business hours, if such delivery shall not have been accepted for any
          reason.

                                      E-24

<PAGE>


     (c)  This Agreement constitutes the entire contract between the Parties,
          and cancels and supersedes all existing contracts between them,
          whether oral or written, with respect to the subject matter hereof. No
          change, modification or amendment of this Agreement shall be effective
          unless set forth in a writing signed by each of the Parties.

     (d)  This Agreement shall be governed by and construed and enforced in
          accordance with the laws of the State of Georgia, without regard to
          its conflicts of laws, rules or principles.

     (e)  Any controversy or claim arising out of or relating to this Agreement
          shall be finally settled by arbitration held in Augusta, Georgia in
          accordance with the rules then obtaining of the American Arbitration
          Association or other arbitration/mediation service agreed to by the
          Parties in writing. Judgment upon an arbitration award may be rendered
          in any court of competent jurisdiction or application may be made to
          any such court for judicial acceptance or an order of enforcement of
          the award, as the case may be, and each Party agrees that any such
          award may be supported by a decree of specific performance or other
          appropriate injunctive relief.

     (f)  No delay or omission to exercise any right, power or remedy accruing
          to any Party shall impair any such right, power or remedy or shall be
          construed to be a waiver of or an acquiescence to any breach hereof.
          No waiver of any breach hereof shall be deemed to be a waiver of any
          other breach hereof theretofore or thereafter occurring. Any waiver of
          any provision hereof shall be effective only to the extent
          specifically set forth in the applicable writing. All remedies
          afforded to a Party under this Agreement, by law or otherwise, shall
          be cumulative and not alternative and shall not preclude assertion by
          such Party of any other rights or the seeking of any other rights or
          remedies against the other Party.

     (g)  If any provision of this Agreement shall be determined to be invalid,
          illegal or unenforceable in whole or in Party, neither the validity of
          the remaining part of such provision nor the validity of any other
          provision of this Agreement shall in any way be affected thereby.

          IN WITNESS WHEREOF, the Parties have duly executed and delivered or
          cause to be duly executed and delivered this Agreement as of the day
          and year first above written.

                                          MAYFAIR HOMES CORPORATION

                                          By: /s/  Robert S. Wilson
                                              ---------------------------------

                                          Title:  Chairman
                                                 -------------------------------


                                          EMPLOYEE:


                                          /S/  E. SAMUEL EVANS
                                          --------------------------------------
                                          E. Samuel Evans

                                          Address:

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

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

                                      E-25




                                                                  EXHIBIT 10-2.1


GEORGIA, County of RICHMOND

THIS AGREEMENT, made the 15th day of February, 1995, among E. Samuel Evans,
first party (hereafter called "Lessor"); Augusta Housing Center, Inc., second
party, (hereafter called "Lessee").

                                   WITNESSETH:

PREMISES LEASE AND TERM
1.   Lessor does hereby rent and lease to the Lessee the following described
     property (hereinafter called premises): one 1995 Mascot Mobile Home Office,
     Serial No. 4479, located at 1919 Gordon Hwy, Augusta, Georgia, 30909.

TERMS
2.   This lease to commence on the 15th day of March, 1995 and end on the 28th
     day of February, 2000.

RENTAL
3.   Lessee shall pay to Lessor promptly on the 1st day of each month in
     advance, during the term of this lease, a monthly rental of $ 815.54.

USE OF
4.   Premises shall be used for Mobile Home Sales Office Purposes and no other.
     Lessee agrees not to abandon or vacate lease premises during the period of
     this lease, and agrees to use said premises for the purpose herein leased
     until the expiration hereof.

INSURANCE
5.   Lessee shall obtain and pay for and keep current insurance coverage on the
     leased premises.

EFFECT OF TERMINATION OF LEASE
6.   No  termination  of this lease prior to normal  ending  thereof by lapse of
     time or  otherwise  shall  affect  Lessor's  right to collect  rent for the
     period prior to termination thereof.

IN WITNESS WHEREOF the parties have executed these presents in triplicate the
day and year first above written.

                                          AUGUSTA HOUSING CENTER, INC.

- - ----------------------
                                          /s/  Brenda Ferron
- - ----------------------                    --------------------------------------

/S/  E. SAMUEL EVANS
- - ----------------------                    --------------------------------------
(Lessor)                                  (Lessee)

                                      E-26




                                                                  EXHIBIT 10-2.2
GEORGIA, County of RICHMOND

THIS AGREEMENT, made the 1st day of January, 1997, among E. Samuel Evans, first
party (hereafter called "Lessor"); Apple Homes, Inc., second party, (hereafter
called "Lessee").

                                   WITNESSETH:

PREMISES LEASE AND TERM
1.   Lessor does hereby rent and lease to the Lessee the following described
     property (hereinafter called premises): one 1997 Mascot Mobile Home Office,
     Serial No. 5756, located at 1878 Gordon Hwy, Augusta, Georgia, 30904.

TERMS
2.   This lease to commence on the 1st day of February, 1997 and end on the 30th
     day of January, 2002.

RENTAL
3.   Lessee shall pay to Lessor promptly on the 1st day of each month in
     advance, during the term of this lease, a monthly rental of $ 971.60.

USE OF
4.   Premises shall be used for Mobile Home Sales Office Purposes and no other.
     Lessee agrees not to abandon or vacate lease premises during the period of
     this lease, and agrees to use said premises for the purpose herein leased
     until the expiration hereof.

INSURANCE
5.   Lessee shall obtain and pay for and keep current insurance coverage on the
     leased premises.

EFFECT OF TERMINATION OF LEASE
6.   No termination of this lease prior to normal ending thereof by lapse of
     time or otherwise shall affect Lessor's right to collect rent for the
     period prior to termination thereof.

IN WITNESS WHEREOF the parties have executed these presents in triplicate the
day and year first above written.

                                               APPLE HOMES, INC.

- - -----------------------
                                               /s/  Brenda Ferron
- - -----------------------                        ---------------------------------

/S/  E. SAMUEL EVANS
- - -----------------------                        ---------------------------------
(Lessor)                                       (Lessee)

                                      E-27


                                                                    EXHIBIT 16.1

CHERRY
BEKAERT &                           July 15, 1999
HOLLAND

Certified Public
Accountants &
Consultants

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Dear Sirs:

We agree with the statements in Item 14 included in the attached Form 10 dated
July 15, 1999 of Apple Homes Corporation, Inc. in the following respects.

     We were dismissed as the independent auditors of the Company in March 1998.

     There were no disagreements with the Company within the two-year period
     ended March 31, 1997 on matters of accounting principles or practices,
     financial statement disclosure, or auditing scope or procedure; or during
     the interim period of april 1, 1997 through January 26, 1998, the date of
     our report on the Company's financial statements for the years ended March
     31, 1997 and 1996. We have not performed any services for the Company since
     we issued our report on the 1997 and 1996 consolidated financial
     statements. Our report on the Company's consolidated financial statements
     for the years ended March 31, 1997 and 1996 contained an unqualified
     opinion.

We have no knowledge of the other events described by the Company in the filing.

                                           Yours very truly,

                                          /s/  Cherry, Bekaert & Holland, L.L.P.
                                          --------------------------------------
                                          CHERRY, BEKAERT & HOLLAND, L.L.P.


                       Cherry, Bekaert & Holland, L.L.P.
1029 Greene Street (30901) - P.O. Box 2247 - Augusta, GA 30903 - (706) 724-3557
                               Fax (706) 724-1667

 Offices Throughout The Southeast - Represented Internationally Through Summit
                         International Associates, Inc.

                                      E-28



                                                                    EXHIBIT 16.2

                                                 SME


                                                      --------------------------
                                                      SEROTTA
                                                      --------------------------
July 15, 1999                                         MADDOCKS
                                                      --------------------------
                                                      EVANS & CO., CPA'S
                                                      --------------------------
                                                      A Professional Corporation
                                                      --------------------------

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

Gentlemen:

We have read Item 14 included in the attached Form 10 dated July 15, 1999 of
Apple Homes Corporation, Inc. and are in agreement with the statements contained
therein.


Very truly yours,


/s/  Serotta Maddocks Evans & Co.
- - -----------------------------------
SEROTTA MADDOCKS EVANS & CO., CPA'S




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

             701 Greene Street, Suite 200 / Augusta, GA 30901-2322
             Telephone (706) 722-5337 Telefax (706) 724-FAXX (3299)

                                      E-29


                                                                      EXHIBIT 21



Subsidiaries of Registrant


Name of Subsidiary                 State of Incorporation      % of Stock Owned
- - ------------------                 ----------------------      ----------------

Augusta Housing Center, Inc               Georgia                    100%

Big Daddy's Mobile Homes, Inc.            Georgia                    80%

JC Homes, Inc                             Georgia                    80%

Evans-Lanier, Inc                         Georgia                    80%

Tim Phillips Homes, Inc.                  Georgia                    100%

Apple Homes, Inc.                         Georgia                    100%

Mobile Air Systems, Inc.                  Georgia                    100%

                                      E-30






                                                                    EXHIBIT 23.1


                       CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the Registration Statement of
Apple Homes Corporation on Form 10 of our report dated January 26, 1998, on our
audit of the consolidated financial statements of Mayfair Homes Corporation and
Subsidiaries as of March 31, 1997 and for the year then ended, which report is
incorporated by reference in this Annual Report on Form 10.


                                         /s/  Cherry, Bekaert & Holland, L.L.P.
                                         ---------------------------------------
                                         Cherry, Bekaert & Holland, L.L.P.

Augusta, Georgia
July 7, 1999

                                      E-31



                                                                    EXHIBIT 23.2


                                                                             SME

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

                                                      SEROTTA
                                                      --------------------------

                                                      MADDOCKS
                                                      --------------------------

CONSENT OF INDEPENDENT ACCOUNTANTS                    EVANS & CO., CPA'S
                                                      --------------------------

                                                      A Professional Corporation
                                                      --------------------------



We consent to the incorporation by reference in the registration statement of
Apple Homes Corp. Inc. on form 10 of our report dated June 15, 1998, except for
Notes 13 and 16, as to which the date is June 23, 1999, on our audit of the
consolidated financial statements of Apple Homes Corp. Inc. as of March 31,
1998, and for the year ended March 31, 1998, which report is incorporated by
reference in this annual report on form 10.



/s/  Serotta Maddocks Evans & Co.
- - ----------------------------------------
SEROTTA MADDOCKS EVANS & CO., CPA's


Augusta, Georgia
July 7, 1999



- - --------------------------------------------------------------------------------
             701 Greene Street, Suite 200 / Augusta, GA 30901-2322
             Telephone (706) 722-5337 Telefax (706) 724-FAXX (3299)


                                      E-32


                                                                    Exhibit 23.3



                       CONSENT OF INDEPENDENT ACCOUNTANTS


     We consent to the incorporation by reference in the Registration Statement
of Apple Homes Corporation on Form 10 of our report dated June 23, 1999, on our
audit of the consolidated financial statements of Apple Homes Corporation and
Subsidiaries as of March 31, 1999 and for the year then ended, which report is
incorporated by reference in this Annual Report on Form 10.



                                       /s/  Gifford, Hillegass & Ingwersen, P.C.
                                       -----------------------------------------
                                       Gifford, Hillegass & Ingwersen, P.C.

Augusta, Georgia
July 14, 1999

                                      E-33


<TABLE> <S> <C>



<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE YEAR ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S>                                            <C>
<PERIOD-TYPE>                                12-MOS
<FISCAL-YEAR-END>                          MAR-31-1999
<PERIOD-END>                               MAR-31-1999
<CASH>                                         683,452
<SECURITIES>                                         0
<RECEIVABLES>                                2,125,826
<ALLOWANCES>                                   148,277
<INVENTORY>                                  8,317,210
<CURRENT-ASSETS>                            10,919,632
<PP&E>                                       1,346,491
<DEPRECIATION>                                 110,615
<TOTAL-ASSETS>                              12,906,584
<CURRENT-LIABILITIES>                        9,476,641
<BONDS>                                      1,054,316
                                0
                                          0
<COMMON>                                         4,183
<OTHER-SE>                                   2,286,927
<TOTAL-LIABILITY-AND-EQUITY>                12,906,584
<SALES>                                     33,776,250
<TOTAL-REVENUES>                            34,648,244
<CGS>                                       27,849,088
<TOTAL-COSTS>                               34,461,212
<OTHER-EXPENSES>                                 9,989
<LOSS-PROVISION>                               155,730
<INTEREST-EXPENSE>                             424,637
<INCOME-PRETAX>                                187,032
<INCOME-TAX>                                    72,739
<INCOME-CONTINUING>                            104,304
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                   104,304
<EPS-BASIC>                                      .05
<EPS-DILUTED>                                        0




</TABLE>


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