SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 8-K


                                 CURRENT REPORT

     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

                        Date of Report, February 27, 2004
                        (Date of earliest event reported)


                       AVALON CORRECTIONAL SERVICES, INC.
                          (Exact name of Registrant as
                       specified in its corporate charter)


                         Commission File Number: 0-20307


                  Nevada                                     13-3592263
         (State of Incorporation)                  (I.R.S. Employer I.D. Number)


               13401 Railway Drive, Oklahoma City, Oklahoma 73114
                    (Address of principal executive offices)


                                 (405) 752-8802
              (Registrant's telephone number, including area code)








<PAGE>

Item 7.  Financial Statements and Exhibits

         The following exhibits are included with this report:

              Exhibit No.                         Description

                   99.1            Company Press Release dated February 27, 2004


Item 12.  Results of Operations and Financial Condition

     On February 27, 2004, Avalon  Correctional  Services,  Inc. (the "Company")
issued a press release  announcing  that the Company  restated the  consolidated
financial  statements for the year ended December 31, 2002 and for the quarterly
periods  ending  March  31,  June 30 and  September  30,  2003,  resulting  from
reevaluation  of the  amortization  period of intangible  assets  related to the
value of contracts previously acquired in business  combinations.  A copy of the
release is included as an exhibit to this report.


                                   SIGNATURES


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



                                              AVALON CORRECTIONAL SERVICES, INC.


Date:     February 27, 2004             By:  s//  David Grose
					     __________________________________
                                              David Grose
                                     Title:   Vice President of Finance



                                INDEX TO EXHIBITS


              Exhibit No.                             Description

                   99.1            Company Press Release dated February 27, 2004


For Immediate Release                                Company      Tiffany Smith
February 27, 2004                                    Contact:     (405) 752-8802


       AVALON ANNOUNCES RESTATEMENT OF 2002 AND 2003 FINANCIAL STATEMENTS

OKLAHOMA CITY, Oklahoma,  February 27, 2004 - Avalon Correctional Services, Inc.
(NASDAQ:CITY)  today  reported  that  the  Company  has  restated   consolidated
financial  statements for the year ended December 31, 2002 and for the quarterly
periods  ending  March  31,  June 30 and  September  30,  2003,  resulting  from
reevaluation  of the  amortization  period of intangible  assets  related to the
value of contracts previously acquired in business  combinations.  Upon original
implementation of Statement of Financial  Accounting Standards ("SFAS") No. 142,
the Company  determined that intangible assets related to the value of contracts
previously acquired in business combinations had indefinite lifes, and therefore
were not  amortized.  After  communication  with the SEC  staff  resulting  in a
reevaluation of the life of contract  intangibles,  the Company has restated the
consolidated  financial  statements  as of and for the year ended  December  31,
2002,  to  amortize  contract  intangibles  over a  fifteen-year  life (the life
assigned  prior to the  implementation  of SFAS No.  142 on  January  1,  2002).
Intangible assets originally determined to have indefinite lives
<PAGE>


totaled  $2,631,000 at December 31, 2002. The effect of the restatement  reduced
total assets from $39,916,000,  as originally  reported at December 31, 2002, to
$39,691,000,  reduced total  liabilities from $29,602,000 to $29,517,000 (due to
income tax effects) and therefore reduced  stockholders'  equity from $7,138,000
to $6,998,000.  The restatement also reduced 2002 net income from $1,261,000, or
$0.22 per diluted share, to $1,121,000, or $0.20 per diluted share. Amortization
of the assets  will reduce  reported  net income in future  periods,  but has no
effect on cash  flows.  A summary of the  effects of these  items on  previously
reported results of operations for certain affected periods follows:

<TABLE>
<CAPTION>
<S>                                                  <C>                <C>              <C>
                                                                As
                                                            Originally       Effect of
           Year Ended December 31, 2002                      Reported       Restatement          Restated
--------------------------------------------------      ---------------    -------------      ------------
Revenues                                              $    27,456,000     $           -    $   27,456,000
Costs and expenses                                         25,563,000           225,000        25,788,000
                                                        ---------------    -------------       -----------
Net income before income tax expense                  $     1,893,000     $    (225,000)   $    1,668,000
Income tax expense                                            632,000           (85,000)          547,000
                                                        ---------------    -------------       -----------
Net income                                            $     1,261,000     $    (140,000)   $    1,121,000
                                                        ===============    ==============       ==========
Basic income per share                                $           .26     $        (.03)   $          .23
                                                        ===============    =============       ===========
Diluted income per share                              $           .22     $        (.02)   $          .20
                                                        ===============    ==============      ===========
</TABLE>

     The consolidated  financial statements for the year ended December 31, 2001
were not impacted as the restatement  pertains to the implementation of SFAS No.
142 on January 1, 2002.

     First  quarter 2003 - The effect of the  restatement  reduced  total assets
from  $40,262,000,  as originally  reported at March 31, 2003,  to  $39,982,000,
reduced total  liabilities  from  $29,654,000 to $29,548,000  (due to income tax
effects)  and  therefore  reduced   stockholders'   equity  from  $7,786,000  to
$7,612,000.

<TABLE>
<CAPTION>
<S>                                                 <C>                <C>                 <C>


                                                             As
                                                         Originally           Effect of
               First quarter 2003                         Reported           Restatement            Restated
-------------------------------------------------       --------------       ------------        ------------
Revenues                                              $     6,170,000    $              -     $     6,170,000
Costs and expenses                                          5,683,000              56,000           5,739,000
                                                        -------------        ------------        ------------
Net income before income tax expense                  $       487,000    $       (56,000)     $       431,000
Income tax expense                                            192,000            (21,000)             171,000
                                                        -------------        ------------       -------------
Net income                                            $       295,000    $       (35,000)     $       260,000
                                                        =============        ============        ============
Basic income per share                                $           .06    $          (.01)     $           .05
                                                        =============        ============        ============
Diluted income per share                              $           .05    $              -     $           .05
                                                        =============        ============        ============
</TABLE>

     Second  quarter 2003 - The effect of the  restatement  reduced total assets
from  $40,342,000,  as  originally  reported at June 30, 2003,  to  $40,005,000,
reduced total  liabilities  from  $29,446,000 to $29,319,000  (due to income tax
effects)  and  therefore  reduced   stockholders'   equity  from  $8,374,000  to
$8,164,000.


<PAGE>

<TABLE>
<CAPTION>
<S>                                            <C>               <C>             <C>

                                                         As
                                                    Originally        Effect of
        Second Quarter 2003                          Reported        Restatement        Restated
--------------------------------------          ---------------     ------------    ------------
Revenues                                        $   6,112,000                -     $   6,112,000

Costs and expenses                                  5,710,000             57,000       5,767,000
                                                 --------------        ---------    ------------
Net income before income tax expense            $     402,000      $    (57,000)   $     345,000
Income tax expense                                    114,000           (21,000)          93,000
                                                 --------------        ---------    ------------
Net income                                      $     288,000      $    (36,000)   $     252,000
                                                 ==============        =========    ============
Basic income per share                          $         .06      $       (.01)   $         .05
                                                 ==============        =========    ============
Diluted income per share                        $         .05      $          -    $         .05
                                                 ==============        =========    ============

</TABLE>

     Third  quarter 2003 - The effect of the  restatement  reduced  total assets
from $40,884,000,  as originally reported at September 30, 2003, to $40,491,000,
reduced total  liabilities  from  $29,638,000 to $29,490,000  (due to income tax
effects)  and  therefore  reduced   stockholders'   equity  from  $8,966,000  to
$8,721,000.

<TABLE>
<CAPTION>
<S>                                           <C>              <C>                  <C>
                                                     As
                                                  Originally        Effect of
     Third Quarter 2003                            Reported        Restatement          Restated
--------------------------------------         -------------       ------------        -----------
Revenues                                       $   6,346,000    $             -      $   6,346,000
Costs and expenses                                 5,807,000              56,000         5,863,000
                                               -------------       -------------       -----------
Net income before income tax expense           $     539,000    $       (56,000)     $     483,000
Income tax expense                                   193,000            (21,000)           172,000
                                               -------------       -------------        ----------
Net income                                     $     346,000    $       (35,000)     $     311,000
                                               =============       =============       ===========
Basic income per share                         $         .07    $          (.01)     $         .06
                                               =============       =============        ==========
Diluted income per share                       $         .06    $              -     $         .06
                                               =============       =============        ==========
</TABLE>

About Avalon Correctional Services, Inc.:

     Avalon  Correctional  Services,  Inc. is a leading developer and manager of
private   community   correctional   facilities  and  alternative   correctional
programming  in the United  States.  Avalon  currently  manages  offenders in 12
correctional facilities in 3 states,  Oklahoma,  Texas and Colorado. The Company
specializes  in  programs  designed  to prepare  offenders  for their  return to
society and programs designed as an alternative to  incarceration.  Avalon is in
its nineteenth year of operations.  The Company offers  offender  rehabilitation
programs and a low cost form of incarceration  that can help to reduce the costs
for taxpayers.  For additional  corporate  information about Avalon please visit
the  company  web  site  at  -   www.avaloncorrections.com   or  contact  us  at
1-800-919-9113.

     Safe  Harbor   Statement   Information   in  this  news  release   contains
forward-looking  statements  as that term is defined in the  Private  Securities
Litigation Reform Act of 1995. For these statements,  we claim the protection of
the  safe  harbor  for  forward-looking  statements  contained  in  the  Private
Securities Litigation Reform Act of 1995. These  forward-looking  statements are
only predictions or statements of current plans that are constantly under review
by the Company.  These forward-looking  statements involve risks,  uncertainties
and assumptions and such statements are qualified by important  factors that may
cause  actual  results  to  differ   materially  from  those  expressed  in  the
forward-looking  statements,  including those factors detailed from time to time
in the Company's  filings,  with the  Securities  and Exchange  Commission.  The
foregoing  information  should be read in conjunction with the Company's filings
with the Securities and Exchange Commission  including,  but not limited to, the
Company's recent quarterly  reports on Form 10-Q and its recent annual report on
Form 10-K including the exhibits to such reports. The forward-looking statements
contained in this news  release are made as of the date hereof.  The Company has
no  obligation to update or revise these  forward-looking  statements to reflect
the  occurrence of future events or  circumstances.  Additional  information  on
factors that may affect the business and financial results of the Company can be
found in filings of the Company with the Securities  and Exchange  Commission at
www.sec.gov/edgar/searchedgar/companysearch.html.
[{"type": "8-K", "sequence": "1", "filename": "k82004.txt", "description": "FORM 8-K  RESTATEMENT OF PRIOR FINANCIAL STATEMENTS", "secsgml_size_bytes": 15393}]
{"company-data": {"conformed-name": "AVALON CORRECTIONAL SERVICES INC", "cik": "0000872202", "assigned-sic": "8744", "irs-number": "133592263", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-20307", "film-number": "04636127"}, "business-address": {"street1": "13401 RAILWAY DR", "city": "OKLAHOMA CITY", "state": "OK", "zip": "73114", "phone": "4057528802"}, "mail-address": {"street1": "13401 RAILWAY DRIVE", "city": "OKLAHOMA CITY", "state": "OK", "zip": "73114"}, "former-company": [{"former-conformed-name": "AVALON COMMUNITY SERVICES INC", "date-changed": "19930328"}, {"former-conformed-name": "AVALON ENTERPRISES INC", "date-changed": "19600201"}]}
SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

                        Date of Report, February 27, 2004
                        (Date of earliest event reported)

                       AVALON CORRECTIONAL SERVICES, INC.
                          (Exact name of Registrant as
                       specified in its corporate charter)

                         Commission File Number: 0-20307

                  Nevada                                     13-3592263
         (State of Incorporation)                  (I.R.S. Employer I.D. Number)

               13401 Railway Drive, Oklahoma City, Oklahoma 73114
                    (Address of principal executive offices)

                                 (405) 752-8802
              (Registrant's telephone number, including area code)
Item 7.  Financial Statements and Exhibits

         The following exhibits are included with this report:

              Exhibit No.                         Description

                   99.1            Company Press Release dated February 27, 2004

Item 12.  Results of Operations and Financial Condition

     On February 27, 2004, Avalon  Correctional  Services,  Inc. (the "Company")
issued a press release  announcing  that the Company  restated the  consolidated
financial  statements for the year ended December 31, 2002 and for the quarterly
periods  ending  March  31,  June 30 and  September  30,  2003,  resulting  from
reevaluation  of the  amortization  period of intangible  assets  related to the
value of contracts previously acquired in business  combinations.  A copy of the
release is included as an exhibit to this report.

                                   SIGNATURES

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

                                              AVALON CORRECTIONAL SERVICES, INC.

Date:     February 27, 2004             By:  s//  David Grose
					     __________________________________
                                              David Grose
                                     Title:   Vice President of Finance

                                INDEX TO EXHIBITS

              Exhibit No.                             Description

                   99.1            Company Press Release dated February 27, 2004

For Immediate Release                                Company      Tiffany Smith
February 27, 2004                                    Contact:     (405) 752-8802

       AVALON ANNOUNCES RESTATEMENT OF 2002 AND 2003 FINANCIAL STATEMENTS

OKLAHOMA CITY, Oklahoma,  February 27, 2004 - Avalon Correctional Services, Inc.
(NASDAQ:CITY)  today  reported  that  the  Company  has  restated   consolidated
financial  statements for the year ended December 31, 2002 and for the quarterly
periods  ending  March  31,  June 30 and  September  30,  2003,  resulting  from
reevaluation  of the  amortization  period of intangible  assets  related to the
value of contracts previously acquired in business  combinations.  Upon original
implementation of Statement of Financial  Accounting Standards ("SFAS") No. 142,
the Company  determined that intangible assets related to the value of contracts
previously acquired in business combinations had indefinite lifes, and therefore
were not  amortized.  After  communication  with the SEC  staff  resulting  in a
reevaluation of the life of contract  intangibles,  the Company has restated the
consolidated  financial  statements  as of and for the year ended  December  31,
2002,  to  amortize  contract  intangibles  over a  fifteen-year  life (the life
assigned  prior to the  implementation  of SFAS No.  142 on  January  1,  2002).
Intangible assets originally determined to have indefinite lives
totaled  $2,631,000 at December 31, 2002. The effect of the restatement  reduced
total assets from $39,916,000,  as originally  reported at December 31, 2002, to
$39,691,000,  reduced total  liabilities from $29,602,000 to $29,517,000 (due to
income tax effects) and therefore reduced  stockholders'  equity from $7,138,000
to $6,998,000.  The restatement also reduced 2002 net income from $1,261,000, or
$0.22 per diluted share, to $1,121,000, or $0.20 per diluted share. Amortization
of the assets  will reduce  reported  net income in future  periods,  but has no
effect on cash  flows.  A summary of the  effects of these  items on  previously
reported results of operations for certain affected periods follows:
As
                                                            Originally       Effect of
           Year Ended December 31, 2002                      Reported       Restatement          Restated
--------------------------------------------------      ---------------    -------------      ------------
Revenues                                              $    27,456,000     $           -    $   27,456,000
Costs and expenses                                         25,563,000           225,000        25,788,000
                                                        ---------------    -------------       -----------
Net income before income tax expense                  $     1,893,000     $    (225,000)   $    1,668,000
Income tax expense                                            632,000           (85,000)          547,000
                                                        ---------------    -------------       -----------
Net income                                            $     1,261,000     $    (140,000)   $    1,121,000
                                                        ===============    ==============       ==========
Basic income per share                                $           .26     $        (.03)   $          .23
                                                        ===============    =============       ===========
Diluted income per share                              $           .22     $        (.02)   $          .20
                                                        ===============    ==============      ===========
The consolidated  financial statements for the year ended December 31, 2001
were not impacted as the restatement  pertains to the implementation of SFAS No.
142 on January 1, 2002.

     First  quarter 2003 - The effect of the  restatement  reduced  total assets
from  $40,262,000,  as originally  reported at March 31, 2003,  to  $39,982,000,
reduced total  liabilities  from  $29,654,000 to $29,548,000  (due to income tax
effects)  and  therefore  reduced   stockholders'   equity  from  $7,786,000  to
$7,612,000.
As
                                                         Originally           Effect of
               First quarter 2003                         Reported           Restatement            Restated
-------------------------------------------------       --------------       ------------        ------------
Revenues                                              $     6,170,000    $              -     $     6,170,000
Costs and expenses                                          5,683,000              56,000           5,739,000
                                                        -------------        ------------        ------------
Net income before income tax expense                  $       487,000    $       (56,000)     $       431,000
Income tax expense                                            192,000            (21,000)             171,000
                                                        -------------        ------------       -------------
Net income                                            $       295,000    $       (35,000)     $       260,000
                                                        =============        ============        ============
Basic income per share                                $           .06    $          (.01)     $           .05
                                                        =============        ============        ============
Diluted income per share                              $           .05    $              -     $           .05
                                                        =============        ============        ============
Second  quarter 2003 - The effect of the  restatement  reduced total assets
from  $40,342,000,  as  originally  reported at June 30, 2003,  to  $40,005,000,
reduced total  liabilities  from  $29,446,000 to $29,319,000  (due to income tax
effects)  and  therefore  reduced   stockholders'   equity  from  $8,374,000  to
$8,164,000.
As
                                                    Originally        Effect of
        Second Quarter 2003                          Reported        Restatement        Restated
--------------------------------------          ---------------     ------------    ------------
Revenues                                        $   6,112,000                -     $   6,112,000

Costs and expenses                                  5,710,000             57,000       5,767,000
                                                 --------------        ---------    ------------
Net income before income tax expense            $     402,000      $    (57,000)   $     345,000
Income tax expense                                    114,000           (21,000)          93,000
                                                 --------------        ---------    ------------
Net income                                      $     288,000      $    (36,000)   $     252,000
                                                 ==============        =========    ============
Basic income per share                          $         .06      $       (.01)   $         .05
                                                 ==============        =========    ============
Diluted income per share                        $         .05      $          -    $         .05
                                                 ==============        =========    ============
Third  quarter 2003 - The effect of the  restatement  reduced  total assets
from $40,884,000,  as originally reported at September 30, 2003, to $40,491,000,
reduced total  liabilities  from  $29,638,000 to $29,490,000  (due to income tax
effects)  and  therefore  reduced   stockholders'   equity  from  $8,966,000  to
$8,721,000.
As
                                                  Originally        Effect of
     Third Quarter 2003                            Reported        Restatement          Restated
--------------------------------------         -------------       ------------        -----------
Revenues                                       $   6,346,000    $             -      $   6,346,000
Costs and expenses                                 5,807,000              56,000         5,863,000
                                               -------------       -------------       -----------
Net income before income tax expense           $     539,000    $       (56,000)     $     483,000
Income tax expense                                   193,000            (21,000)           172,000
                                               -------------       -------------        ----------
Net income                                     $     346,000    $       (35,000)     $     311,000
                                               =============       =============       ===========
Basic income per share                         $         .07    $          (.01)     $         .06
                                               =============       =============        ==========
Diluted income per share                       $         .06    $              -     $         .06
                                               =============       =============        ==========
About Avalon Correctional Services, Inc.:

     Avalon  Correctional  Services,  Inc. is a leading developer and manager of
private   community   correctional   facilities  and  alternative   correctional
programming  in the United  States.  Avalon  currently  manages  offenders in 12
correctional facilities in 3 states,  Oklahoma,  Texas and Colorado. The Company
specializes  in  programs  designed  to prepare  offenders  for their  return to
society and programs designed as an alternative to  incarceration.  Avalon is in
its nineteenth year of operations.  The Company offers  offender  rehabilitation
programs and a low cost form of incarceration  that can help to reduce the costs
for taxpayers.  For additional  corporate  information about Avalon please visit
the  company  web  site  at  -   www.avaloncorrections.com   or  contact  us  at
1-800-919-9113.

     Safe  Harbor   Statement   Information   in  this  news  release   contains
forward-looking  statements  as that term is defined in the  Private  Securities
Litigation Reform Act of 1995. For these statements,  we claim the protection of
the  safe  harbor  for  forward-looking  statements  contained  in  the  Private
Securities Litigation Reform Act of 1995. These  forward-looking  statements are
only predictions or statements of current plans that are constantly under review
by the Company.  These forward-looking  statements involve risks,  uncertainties
and assumptions and such statements are qualified by important  factors that may
cause  actual  results  to  differ   materially  from  those  expressed  in  the
forward-looking  statements,  including those factors detailed from time to time
in the Company's  filings,  with the  Securities  and Exchange  Commission.  The
foregoing  information  should be read in conjunction with the Company's filings
with the Securities and Exchange Commission  including,  but not limited to, the
Company's recent quarterly  reports on Form 10-Q and its recent annual report on
Form 10-K including the exhibits to such reports. The forward-looking statements
contained in this news  release are made as of the date hereof.  The Company has
no  obligation to update or revise these  forward-looking  statements to reflect
the  occurrence of future events or  circumstances.  Additional  information  on
factors that may affect the business and financial results of the Company can be
found in filings of the Company with the Securities  and Exchange  Commission at
www.sec.gov/edgar/searchedgar/companysearch.html.