SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                           CURRENT REPORT ON FORM 8-K


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

                         Date of Report, October 1, 1998


                         Commission File Number: 0-20307

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



        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
                           (Issuer's telephone number)












<PAGE>





ITEM 2.  Acquisition of Assets


  On  September  16,  1998,  Avalon  Community  Services  Inc.  closed a private
placement  with the firm of Rice Sangalis Toole & Wilson.  The Company  received
gross proceeds  through the private  placement of $15 million from RSTW Partners
III L.P. Neither the Company,  nor any of its affiliates,  officers or directors
has any  material  relationship  with RSTW  Partners  III L.P.  The Company will
utilize the proceeds to construct,  develop and expand existing and new programs
and facilities, acquisitions and working capital requirements for the purpose of
growing the Company's business.

  The private  placement  provides for a $10 million  senior  subordinated  note
facility under a Note Purchase  Agreement.  The senior subordinated note accrues
interest at the rate of 12.5%, with interest payable in quarterly  installments.
The maturity date of the senior  subordinated  note is September  15, 2006.  The
private  placement  provides for a Stock Purchase  Agreement for the issuance of
1,622,448 shares of class A common stock. The Stock Purchase  Agreement provides
for certain rights and anti-dilution  provisions which will effectively maintain
an equity  position on a fully  diluted  basis of 25% of the Company.  The Stock
Purchase  Agreement  provides for additional rights which may be terminated upon
the successful completion of a public secondary offering. A separate Shareholder
Agreement  was  executed  to  restrict  sales of  shares  of  stock  by  certain
beneficial owners.



ITEM 7.  Financial Statements and Exhibits

a.   Note Purchase  Agreement dated September 16,1998 between RSTW Partners III,
     L.P., Avalon Community Services Inc. and Southern Corrections Systems Inc.

b.   Stock Purchase Agreement dated September 16,1998 between RSTW Partners III,
     L.P. and Avalon Community Services Inc.

c.   Shareholder  Agreement dated  September  16,1998 between RSTW Partners III,
     L.P.,  Avalon  Community  Services  Inc.,  Donald  E.  Smith  and  Jerry M.
     Sunderland.

d.   Accounting for this transaction requires the use of estimates and valuation
     models  which are not  complete  at this time.  A pro forma  balance  sheet
     reflecting  the  transation as if it had occurred at the quarter ended June
     30, 1998, will be filed no later than November 15, 1998.














                                     Page 1

<PAGE>



                AVALON COMMUNITY SERVICES, INC. AND SUBSIDIARIES
                                   SIGNATURES



  In accordance  with the  requirements  of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned  thereunto duly
authorized.


Date:    October 1, 1998                         AVALON COMMUNITY SERVICES, INC.



                                                 By:   \Jerry Sunderland
                                                 Jerry Sunderland, President
[{"type": "8-K", "sequence": "1", "description": "PRIVATE PLACEMENT", "secsgml_size_bytes": 3918}]
{"company-data": {"conformed-name": "AVALON COMMUNITY SERVICES INC", "cik": "0000872202", "assigned-sic": "8744", "irs-number": "133592263", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "file-number": "000-20307", "film-number": "98719753"}, "business-address": {"street1": "13401 RAILWAY DR", "street2": "P O BOX 57012", "city": "OKLAHOMA CITY", "state": "OK", "zip": "73157", "phone": "4057528802"}, "mail-address": {"street1": "P O BOX 57012", "city": "OKLAHOMA CITY", "state": "OK", "zip": "73157"}, "former-company": {"former-conformed-name": "AVALON ENTERPRISES INC", "date-changed": "19600201"}}
SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                           CURRENT REPORT ON FORM 8-K

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

                         Date of Report, October 1, 1998

                         Commission File Number: 0-20307

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

        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
                           (Issuer's telephone number)
ITEM 2.  Acquisition of Assets

  On  September  16,  1998,  Avalon  Community  Services  Inc.  closed a private
placement  with the firm of Rice Sangalis Toole & Wilson.  The Company  received
gross proceeds  through the private  placement of $15 million from RSTW Partners
III L.P. Neither the Company,  nor any of its affiliates,  officers or directors
has any  material  relationship  with RSTW  Partners  III L.P.  The Company will
utilize the proceeds to construct,  develop and expand existing and new programs
and facilities, acquisitions and working capital requirements for the purpose of
growing the Company's business.

  The private  placement  provides for a $10 million  senior  subordinated  note
facility under a Note Purchase  Agreement.  The senior subordinated note accrues
interest at the rate of 12.5%, with interest payable in quarterly  installments.
The maturity date of the senior  subordinated  note is September  15, 2006.  The
private  placement  provides for a Stock Purchase  Agreement for the issuance of
1,622,448 shares of class A common stock. The Stock Purchase  Agreement provides
for certain rights and anti-dilution  provisions which will effectively maintain
an equity  position on a fully  diluted  basis of 25% of the Company.  The Stock
Purchase  Agreement  provides for additional rights which may be terminated upon
the successful completion of a public secondary offering. A separate Shareholder
Agreement  was  executed  to  restrict  sales of  shares  of  stock  by  certain
beneficial owners.

ITEM 7.  Financial Statements and Exhibits

a.   Note Purchase  Agreement dated September 16,1998 between RSTW Partners III,
     L.P., Avalon Community Services Inc. and Southern Corrections Systems Inc.

b.   Stock Purchase Agreement dated September 16,1998 between RSTW Partners III,
     L.P. and Avalon Community Services Inc.

c.   Shareholder  Agreement dated  September  16,1998 between RSTW Partners III,
     L.P.,  Avalon  Community  Services  Inc.,  Donald  E.  Smith  and  Jerry M.
     Sunderland.

d.   Accounting for this transaction requires the use of estimates and valuation
     models  which are not  complete  at this time.  A pro forma  balance  sheet
     reflecting  the  transation as if it had occurred at the quarter ended June
     30, 1998, will be filed no later than November 15, 1998.

                                     Page 1
AVALON COMMUNITY SERVICES, INC. AND SUBSIDIARIES
                                   SIGNATURES

  In accordance  with the  requirements  of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned  thereunto duly
authorized.

Date:    October 1, 1998                         AVALON COMMUNITY SERVICES, INC.

                                                 By:   \Jerry Sunderland
                                                 Jerry Sunderland, President