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 (Date of earliest event reported) October 9, 1996


                       INTEGRATED LIVING COMMUNITIES, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


          Delaware                     000-21263               52-1967027
----------------------------          ------------           ---------------
(State or other jurisdiction          (Commission            (IRS Employer
of incorporation)                     File Number)           Identification No.)



  24850 Old 41 Road, Suite 10, Bonita Springs, FL                      34135
-----------------------------------------------------                ----------
   (Address of principal executive offices)                          (Zip Code)

       Registrant's telephone number, including area code: (941) 947-7200
                                                           ---------------

                                 Not Applicable
--------------------------------------------------------------------------------
          (Former name or former address, if changed since last report)


<PAGE>

Item 2.    Acquisition or Disposition of Assets.

         On  October  9,  1996,   Integrated  Living   Communities,   Inc.  (the
"Company"), through a wholly-owned subsidiary, purchased all the assets used in,
and assumed certain liabilities related to, the operation of the Terrace Gardens
Continuous  Care  Retirement  Center  ("Terrace  Gardens"),  a 258  unit/342 bed
assisted  living and senior housing  facility  located in Wichita,  Kansas which
also  includes a 100 bed nursing  facility.  The  Company  used a portion of the
proceeds from its initial public  offering of Common Stock,  which was completed
on October 9, 1996, to pay the $12.2  million  purchase  price.  The assets were
purchased from Herbert L. Krumsick,  Jon Kardatzke,  Louis Weiss,  Chester West,
Ross G. Tidemann, Nestor R. Weigand, Jr. and Terrace Gardens, L.P.

        





                                       -2-



<PAGE>

Item 7.    Financial Statements and Exhibits

      (a)  Financial statements of business acquired.

           1. The balance sheets of Terrace  Gardens as of December 31, 1994 and
           1995 and the related  statements  of  operations,  changes in owners'
           deficit and cash flows for the years ended  December 31,  1993,  1994
           and 1995,  and the notes  thereto,  audited by KPMG Peat Marwick LLP,
           independent  accountants,  are incorporated  herein by reference from
           the Company's Registration Statement on Form S-1 (No. 333-05877).

           2. The unaudited balance sheet of Terrace Gardens as of June 30, 1996
           and the related unaudited statements of operations and cash flows for
           the six months ended June 30, 1995 and 1996 are included herein.

      (b)  Pro forma financial information.

           1. The unaudited pro forma  consolidated  balance sheet of Integrated
           Living  Communities,  Inc. as of June 30, 1996,  giving effect to the
           acquisition of the Terrace  Gardens  facility as if such  transaction
           occurred on June 30, 1996.

           2. The  unaudited pro forma  consolidated  statement of operations of
           Integrated  Living  Communities,  Inc.  for  the  fiscal  year  ended
           December 31, 1995,  giving effect to the  acquisition  of the Terrace
           Gardens facility, as if such acquisition occurred on the first day of
           the fiscal year.

           3. The  unaudited pro forma  consolidated  statement of operations of
           Integrated Living Communities, Inc. for the six months ended June 30,
           1996,  giving  effect  to  the  acquisition  of the  Terrace  Gardens
           facility as if such acquisition was consummated on January 1, 1995.

      (c)  Exhibits.

           2. Asset  Purchase  Agreement,  made as of the _____ day  __________,
           1996, by and among Integrated Living  Communities,  Inc.,  Herbert L.
           Krumsick, Jon Kardatzke, Louis Weiss, Chester West, Ross G. Tidemann,
           Nestor R. Weigand,  Jr., and Terrace Gardens,  L.P. (previously filed
           with the  Commission  as Exhibit 2.1 to, and  incorporated  herein by
           reference from, the Company's Registration Statement on Form S-1 (No.
           333-05877)).

           23.      Consent of KPMG Peat Marwick LLP.



                                       -3-



<PAGE>

                        Terrace Gardens Tenants in Common
            (D/B/A Terrace Gardens Healthcare and Retirement Center)
                                 Balance Sheets
                             (dollars in thousands)



<TABLE>
<CAPTION>

                                               December 31, 1995         June 30, 1996
                                              -----------------          -------------
                                                                          (unaudited)
Assets

<S>                                                <C>                      <C>    
 Cash ......................................       $   319                  $   457
 Accounts receivable .......................           449                      387 
 Other current assets ......................            52                       79    
                                                   -------                  -------
  Total Current Assets .....................           820                      923
 Property, plant and equipment .............         8,045                    7,895
 Other long term assets ....................           139                      133
                                                   -------                  ------- 
    Total Assets ...........................       $ 9,004                  $ 8,951
                                                   =======                  =======


Liabilities and Partners' Equity

 Current liabilities ........................      $   999                  $ 1,211
 Long term debt .............................        8,093                    7,927
                                                   -------                  -------
  Total Liabilities .........................        9,092                    9,138
 Owner's deficit ............................          (88)                    (187)
                                                   -------                  -------
    Total Liabilities and Equity ............      $ 9,004                  $ 8,951
                                                   =======                  =======
</TABLE>






                                       -4-



<PAGE>

                        Terrace Gardens Tenants in Common
            (D/B/A Terrace Gardens Healthcare and Retirement Center)
                             Statements of Operations
                             (dollars in thousands)

                                                      
<TABLE>
<CAPTION>
                                                        Six Months Ended June 30,
                                                        -------------------------
                                                       1995                    1996
                                                       ----                    ----
                                                               (unaudited)
<S>                                                <C>                      <C>    
 Monthly service fees........................      $ 2,853                  $ 2,467

 Other revenues..............................          134                      157
                                                  --------                 --------
  Total Revenues.............................        2,987                    2,624

 Operating expenses..........................        2,066                    1,966

 Administrative..............................          251                      245

 Interest....................................          380                      339

 Depreciation and amortization...............          173                      173
                                                  --------                 --------
  Total Expenses.............................        2,870                    2,723
                                                 ---------                ---------
     Net Earnings............................      $   117                  $   (99)
                                                 =========                =========

</TABLE>





                                       -5-

<PAGE>

                        Terrace Gardens Tenants in Common
            (D/B/A Terrace Gardens Healthcare and Retirement Center)
                            Statements of Cash Flows
                             (dollars in thousands)


<TABLE>
<CAPTION>

                                                          Six Months Ended June 30,
                                                          -------------------------
                                                       1995                      1996
                                                       ----                      ----
                                                                (unaudited)
<S>                                                <C>                      <C>      
 Net cash provided by operations.............      $    281                 $     333
                                                   ---------                 ---------
 Payments of long term debt..................          (140)                     (157)
 Distributions to tenants....................          (130)                      (15)
                                                   ---------                 ---------
  Net cash used in financing.................          (270)                     (172)

 Purchase of property, plant and equipment...            (5)                      (23)
                                                   ---------                 ---------
  Net cash used in investing.................            (5)                      (23)
                                                   ---------                 ---------
 Increase (decrease) in cash.................             6                       138

 Cash, beginning of period...................           205                       319
                                                   ---------                 ---------
 Cash, end of period.........................      $    211                 $     457
                                                   =========                 =========
</TABLE>






                                       -6-



<PAGE>

Note  Basis of Presentation

         The accompanying  unaudited condensed  financial  statements of Terrace
Gardens  Tenants in Common (d/b/a  Terrace  Gardens  Healthcare  and  Retirement
Center)  ("Terrace  Gardens")  have been prepared in accordance  with  generally
accepted accounting principles for interim financial  information.  Accordingly,
they do not include all of the information  and footnotes  required by generally
accepted accounting principles for complete financial statements. In the opinion
of  management,  all  adjustments  (consisting  of  normal  recurring  accruals)
considered  necessary  for a fair  presentation  have been  included.  Operating
results for the six months ended June 30, 1996 are not necessarily indicative of
the results  that may be expected for the year ending  December  31,  1996.  For
further information,  refer to the financial statements and footnotes thereto of
Terrace Gardens included in the Registration Statement on Form S-1 of Integrated
Living Communities, Inc. (No. 333-05877). The balance sheet at December 31, 1995
has been derived from the audited financial statements at that date.

      








                                       -7-



<PAGE>

                         PRO FORMA FINANCIAL INFORMATION

         The  accompanying unaudited pro forma consolidated financial statements
have been prepared based on (i) the audited consolidated financial statements of
the  Company  for  the  year  ended  December  31,  1995,   (ii)  the  unaudited
consolidated  financial  statements  of the Company as of and for the six months
ended June 30, 1996, (iii) the audited  financial  statements of Terrace Gardens
Tenants in Common,  d/b/a  Terrace  Gardens  Health Care and  Retirement  Center
("Terrace  Gardens") for the year ended December 31, 1995 and (iv) the unaudited
financial  statements of Terrace Gardens as of and for the six months ended June
30, 1996.

         The pro  forma  consolidated  balance  sheet  as of June  30,  1996 was
prepared  as if the  acquisition  of  the  Terrace  Gardens  facility  had  been
consummated  as of June 30,  1996.  The pro  forma  consolidated  statements  of
operations  for the year ended  December  31, 1995 and the six months ended June
30, 1996 were prepared as if the acquisition of the Terrace Gardens facility had
been  consummated on January 1, 1995. The pro forma  financial  statements  were
prepared  as if the  Company  had  issued  1,639,785  shares  of  Common  Stock,
representing  the  number of shares  required  to be sold by the  Company at the
initial public offering price of $8.00 per share (net of underwriting discounts)
in order for the  Company  to pay the  purchase  price for the  Terrace  Gardens
facility. The Company used the proceeds from its initial public  offering to pay
the purchase price for Terrace Gardens.

         The pro forma  adjustments  are based upon  available  information  and
certain assumptions that management  believes are reasonable.  The unaudited pro
forma  combined  financial  information  set  forth  below  is  not  necessarily
indicative  of the  Company's  combined  financial  position  or the  results of
operations  that  actually  would  have  occurred  if the  transaction  had been
consummated  on the dates  shown.  In  addition,  they are not  intended to be a
projection  of results  of  operations  that may be  obtained  in the  Company's
future.  The unaudited pro forma  consolidated  financial  information should be
read in  conjunction  with the  financial  statements  and related notes thereto
included elsewhere or incorporated by reference in this Report.






                                       -8-



<PAGE>

                       INTEGRATED LIVING COMMUNITIES, INC.
                        UNAUDITED PRO FORMA BALANCE SHEET
                                  JUNE 30, 1996
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                           ILC                Terrace Gardens
                                                           ---                ---------------
                                                                                       Adjust-           Pro forma
                                                          Actual       Actual          ments(a)        consolidated
                                                          ------       ------          --------        ------------

Assets

<S>                                                     <C>           <C>            <C>               <C>    
   Cash and cash equivalents....................        $   120       $   457        $   (457)         $   120
   Accounts receivable..........................            355           387            (387)             355
   Prepaid expenses and other current assets....            407            79             (79)             407
                                                         ------         -----          -------          ------
    Total current assets........................            882           923            (923)             882
                                                         ------        ------         --------          ------
   Assets limited as to use.....................            705           ---                              705
   Property, plant and equipment, net...........         50,626         7,895            4,385          62,906
   Other assets.................................          3,252           133            (133)           3,252
                                                         ------        ------         --------        --------
                                                        $55,465        $8,951          $3,329          $67,745
                                                        =======        ======          =======         =======


Liabilities and Stockholder's Equity

   Accounts payable.............................        $   828       $   176        $   (176)         $   828
   Accrued expenses.............................          1,309           711            (631)           1,389
   Current portion of long-term debt............            ---           324            (324)             ---
                                                         ------        ------         --------          ------
    Total current liabilities...................          2,137         1,211          (1,131)           2,217
                                                        -------       -------        ---------         -------
   Note payable to parent company...............          3,363           ---                            3,363
   Refundable deposits..........................          5,398           ---                            5,398
   Deferred income taxes........................            324           ---                              324
   Unearned entrance fees.......................          3,912           ---                            3,912
   Long-term debt less current portion..........            ---         7,927          (7,927)             ---
                                                         ------       -------        ---------         -------

    Total liabilities...........................         15,134         9,138          (9,058)          15,214
                                                         ------       -------        ---------         -------
   Stockholder's equity

    Common stock, $.01  par  value.  Authorized
    100,000,000 shares; 3,897,900 shares issued
    and outstanding actual and 5,537,685 shares
    issued and outstanding pro forma............             39           ---              16               55

     Additional paid-in capital.................         42,359           ---          12,184           54,543

     Retained earnings (deficit)................         (2,067)         (187)            187           (2,067)
                                                         -------      --------         ------         --------

     Net stockholder's equity...................         40,331          (187)         12,387           52,531
                                                         -------      --------         ------         --------

                                                        $55,465        $8,951          $3,329          $67,745
                                                         =======       ======          ======          =======
</TABLE>





                      -9-



<PAGE>

                       INTEGRATED LIVING COMMUNITIES, INC.
                   UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
                          YEAR ENDED DECEMBER 31, 1995
                    (In thousands, except per share amounts)


<TABLE>
<CAPTION>

                                                            ILC             Terrace Gardens
                                                            ---             ---------------

                                                                                                     Pro Forma
                                                          Actual       Actual      Adjustments       Consolidated
                                                          ------       ------      -----------       ------------

Revenues:

<S>                                                     <C>            <C>             <C>             <C>    
   Monthly service and entrance fees............        $15,123        $5,642                          $20,765
   Management services and other................          1,146           301                            1,447
                                                        -------        ------                           ------
     Total revenues.............................         16,269         5,943                           22,212
                                                        -------        ------                           ------
Expenses:
   Facility operations..........................         11,243         4,068                           15,311
   Facility rents...............................          2,430           ---                            2,430
   Corporate administrative and general.........          1,005           546                            1,551  
                                                  
   Depreciation and amortization................            415           345          $(47)(b)            713 
   Loss on impairment                           
     of long-lived assets.......................          5,126            --                            5,126
   Interest.....................................            ---           739          (739)(b)            ---
                                                         ------        ------       -------              -----
     Total expenses.............................         20,219         5,698          (786)            25,131
                                                          ------        -----       -------             ------
Earnings (loss) before income taxes
  and minority interest..........................        (3,950)          245           786             (2,919)
Minority interest................................             37          ---           ---                 37
                                                           -----        -----          ----              -----
Earnings (loss) before income taxes..............        (3,987)      $   245       $   786             (2,956)
                                                                      =======       =======            ========
     Federal and state income taxes..............          (643)                                          (246)(c)
                                                         -------                                       --------
Net loss.........................................       $(3,344)                                      $ (2,710)
                                                        ========                                      =========

Net earnings per common share....................       $  (.86)                                       $  (.49)
                                                        ========                                       ========
Weighted average shares outstanding..............          3,898                                         5,538
                                                         =======                                       ========

</TABLE>





                                      -10-


<PAGE>

                       INTEGRATED LIVING COMMUNITIES, INC.
                   UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
                         SIX MONTHS ENDED JUNE 30, 1996
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>

                                                        ILC              Terrace Gardens
                                                        ---              ---------------

                                                                                                     Pro forma
                                                        Actual        Actual         Adjustments    Consolidated
                                                        ------        ------         -----------    ------------

Revenues:

<S>                                                     <C>           <C>               <C>            <C>    
   Monthly service and entrance fees............        $10,568       $2,467                           $13,035
   Management services and other................            727          157                               884
                                                         ------       ------                           -------
     Total revenues.............................         11,295        2,624                            13,919
                                                         ------        -----                            ------
Expenses: 
   Facility operations..........................          7,138        1,966                             9,104
   Facility rents...............................          1,309          ---                             1,309
   Corporate administrative and general.........            678          245                               923
   Depreciation and amortization................            480          173            $(24)(b)           629
   Interest.....................................            ---          339            (339)(b)           ---
                                                         ------        -----            --------        ------
     Total expenses.............................          9,605        2,723               (363)        11,965
                                                         ------        -----             -------      --------
Earnings (loss) before income taxes.............          1,690       $  (99)            $  363          1,954
                                                                     =======              ======
Federal and state income taxes..................            651                                            752 (c)
                                                         ------                                        -------
Net earnings....................................       $  1,039                                        $ 1,202
                                                       ========                                       ========
Net earnings per common share...................       $    .27                                        $   .22
                                                       ========                                        =======
Weighted average shares outstanding.............          3,898                                          5,538
                                                       ========                                        =======

</TABLE>






                                      -11-



<PAGE>

               NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

Pro Forma Adjustments

(a)   To reflect the purchase price of, and estimated  transaction costs related
      to, the  acquisition of the Terrace  Gardens  facility and the issuance of
      1,639,785  shares of Common Stock,  representing the number of shares sold
      by the Company at the  initial  public  offering  price of $8.00 per share
      (net of  underwriting  discounts)  in  order  for the  Company  to pay the
      purchase  price for the Terrace  Gardens  facility,  and to eliminate  the
      assets and liabilities retained by the seller.

(b)   To reflect the impact of the  Company's new basis in the assets of Terrace
      Gardens and the elimination of amortization of deferred financing fees and
      interest  expense on debt not assumed.  The Company assumed a 40 year life
      for building and improvements and a 10 year life for equipment.

(c)   To adjust consolidated income tax expense for the effect of the adjustment
      above.

    






                                      -12-



<PAGE>

                                   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.

Date:    October 23, 1996

                                       INTEGRATED LIVING COMMUNITIES, INC.

                                       By: /s/ John B. Poole
                                          --------------------------------------
                                          John B. Poole

                                          Senior Vice President--Chief Financial
                                                   Officer 








                                      -13-
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{"company-data": {"conformed-name": "INTEGRATED LIVING COMMUNITIES INC", "cik": "0001016202", "assigned-sic": "8051", "irs-number": "521967027", "state-of-incorporation": "DE"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-21263", "film-number": "96647153"}, "business-address": {"street1": "24850 OLD 41 RD", "street2": "STE 10", "city": "BONITA SPRINGS", "state": "FL", "zip": "34135", "phone": "4109988844"}, "mail-address": {"street1": "10065 RED RUN BLVD", "city": "OWINGS MILLS", "state": "MD", "zip": "21117"}}
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 (Date of earliest event reported) October 9, 1996

                       INTEGRATED LIVING COMMUNITIES, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                     000-21263               52-1967027
----------------------------          ------------           ---------------
(State or other jurisdiction          (Commission            (IRS Employer
of incorporation)                     File Number)           Identification No.)

  24850 Old 41 Road, Suite 10, Bonita Springs, FL                      34135
-----------------------------------------------------                ----------
   (Address of principal executive offices)                          (Zip Code)

       Registrant's telephone number, including area code: (941) 947-7200
                                                           ---------------

                                 Not Applicable
--------------------------------------------------------------------------------
          (Former name or former address, if changed since last report)
Item 2.    Acquisition or Disposition of Assets.

         On  October  9,  1996,   Integrated  Living   Communities,   Inc.  (the
"Company"), through a wholly-owned subsidiary, purchased all the assets used in,
and assumed certain liabilities related to, the operation of the Terrace Gardens
Continuous  Care  Retirement  Center  ("Terrace  Gardens"),  a 258  unit/342 bed
assisted  living and senior housing  facility  located in Wichita,  Kansas which
also  includes a 100 bed nursing  facility.  The  Company  used a portion of the
proceeds from its initial public  offering of Common Stock,  which was completed
on October 9, 1996, to pay the $12.2  million  purchase  price.  The assets were
purchased from Herbert L. Krumsick,  Jon Kardatzke,  Louis Weiss,  Chester West,
Ross G. Tidemann, Nestor R. Weigand, Jr. and Terrace Gardens, L.P.

        

                                       -2-
Item 7.    Financial Statements and Exhibits

      (a)  Financial statements of business acquired.

           1. The balance sheets of Terrace  Gardens as of December 31, 1994 and
           1995 and the related  statements  of  operations,  changes in owners'
           deficit and cash flows for the years ended  December 31,  1993,  1994
           and 1995,  and the notes  thereto,  audited by KPMG Peat Marwick LLP,
           independent  accountants,  are incorporated  herein by reference from
           the Company's Registration Statement on Form S-1 (No. 333-05877).

           2. The unaudited balance sheet of Terrace Gardens as of June 30, 1996
           and the related unaudited statements of operations and cash flows for
           the six months ended June 30, 1995 and 1996 are included herein.

      (b)  Pro forma financial information.

           1. The unaudited pro forma  consolidated  balance sheet of Integrated
           Living  Communities,  Inc. as of June 30, 1996,  giving effect to the
           acquisition of the Terrace  Gardens  facility as if such  transaction
           occurred on June 30, 1996.

           2. The  unaudited pro forma  consolidated  statement of operations of
           Integrated  Living  Communities,  Inc.  for  the  fiscal  year  ended
           December 31, 1995,  giving effect to the  acquisition  of the Terrace
           Gardens facility, as if such acquisition occurred on the first day of
           the fiscal year.

           3. The  unaudited pro forma  consolidated  statement of operations of
           Integrated Living Communities, Inc. for the six months ended June 30,
           1996,  giving  effect  to  the  acquisition  of the  Terrace  Gardens
           facility as if such acquisition was consummated on January 1, 1995.

      (c)  Exhibits.

           2. Asset  Purchase  Agreement,  made as of the _____ day  __________,
           1996, by and among Integrated Living  Communities,  Inc.,  Herbert L.
           Krumsick, Jon Kardatzke, Louis Weiss, Chester West, Ross G. Tidemann,
           Nestor R. Weigand,  Jr., and Terrace Gardens,  L.P. (previously filed
           with the  Commission  as Exhibit 2.1 to, and  incorporated  herein by
           reference from, the Company's Registration Statement on Form S-1 (No.
           333-05877)).

           23.      Consent of KPMG Peat Marwick LLP.

                                       -3-
Terrace Gardens Tenants in Common
            (D/B/A Terrace Gardens Healthcare and Retirement Center)
                                 Balance Sheets
                             (dollars in thousands)
December 31, 1995         June 30, 1996
                                              -----------------          -------------
                                                                          (unaudited)
Assets
Cash ......................................       $   319                  $   457
 Accounts receivable .......................           449                      387 
 Other current assets ......................            52                       79    
                                                   -------                  -------
  Total Current Assets .....................           820                      923
 Property, plant and equipment .............         8,045                    7,895
 Other long term assets ....................           139                      133
                                                   -------                  ------- 
    Total Assets ...........................       $ 9,004                  $ 8,951
                                                   =======                  =======

Liabilities and Partners' Equity

 Current liabilities ........................      $   999                  $ 1,211
 Long term debt .............................        8,093                    7,927
                                                   -------                  -------
  Total Liabilities .........................        9,092                    9,138
 Owner's deficit ............................          (88)                    (187)
                                                   -------                  -------
    Total Liabilities and Equity ............      $ 9,004                  $ 8,951
                                                   =======                  =======
-4-
Terrace Gardens Tenants in Common
            (D/B/A Terrace Gardens Healthcare and Retirement Center)
                             Statements of Operations
                             (dollars in thousands)
Six Months Ended June 30,
                                                        -------------------------
                                                       1995                    1996
                                                       ----                    ----
                                                               (unaudited)
Monthly service fees........................      $ 2,853                  $ 2,467

 Other revenues..............................          134                      157
                                                  --------                 --------
  Total Revenues.............................        2,987                    2,624

 Operating expenses..........................        2,066                    1,966

 Administrative..............................          251                      245

 Interest....................................          380                      339

 Depreciation and amortization...............          173                      173
                                                  --------                 --------
  Total Expenses.............................        2,870                    2,723
                                                 ---------                ---------
     Net Earnings............................      $   117                  $   (99)
                                                 =========                =========
-5-
Terrace Gardens Tenants in Common
            (D/B/A Terrace Gardens Healthcare and Retirement Center)
                            Statements of Cash Flows
                             (dollars in thousands)
Six Months Ended June 30,
                                                          -------------------------
                                                       1995                      1996
                                                       ----                      ----
                                                                (unaudited)
Net cash provided by operations.............      $    281                 $     333
                                                   ---------                 ---------
 Payments of long term debt..................          (140)                     (157)
 Distributions to tenants....................          (130)                      (15)
                                                   ---------                 ---------
  Net cash used in financing.................          (270)                     (172)

 Purchase of property, plant and equipment...            (5)                      (23)
                                                   ---------                 ---------
  Net cash used in investing.................            (5)                      (23)
                                                   ---------                 ---------
 Increase (decrease) in cash.................             6                       138

 Cash, beginning of period...................           205                       319
                                                   ---------                 ---------
 Cash, end of period.........................      $    211                 $     457
                                                   =========                 =========
-6-
Note  Basis of Presentation

         The accompanying  unaudited condensed  financial  statements of Terrace
Gardens  Tenants in Common (d/b/a  Terrace  Gardens  Healthcare  and  Retirement
Center)  ("Terrace  Gardens")  have been prepared in accordance  with  generally
accepted accounting principles for interim financial  information.  Accordingly,
they do not include all of the information  and footnotes  required by generally
accepted accounting principles for complete financial statements. In the opinion
of  management,  all  adjustments  (consisting  of  normal  recurring  accruals)
considered  necessary  for a fair  presentation  have been  included.  Operating
results for the six months ended June 30, 1996 are not necessarily indicative of
the results  that may be expected for the year ending  December  31,  1996.  For
further information,  refer to the financial statements and footnotes thereto of
Terrace Gardens included in the Registration Statement on Form S-1 of Integrated
Living Communities, Inc. (No. 333-05877). The balance sheet at December 31, 1995
has been derived from the audited financial statements at that date.

      

                                       -7-
PRO FORMA FINANCIAL INFORMATION

         The  accompanying unaudited pro forma consolidated financial statements
have been prepared based on (i) the audited consolidated financial statements of
the  Company  for  the  year  ended  December  31,  1995,   (ii)  the  unaudited
consolidated  financial  statements  of the Company as of and for the six months
ended June 30, 1996, (iii) the audited  financial  statements of Terrace Gardens
Tenants in Common,  d/b/a  Terrace  Gardens  Health Care and  Retirement  Center
("Terrace  Gardens") for the year ended December 31, 1995 and (iv) the unaudited
financial  statements of Terrace Gardens as of and for the six months ended June
30, 1996.

         The pro  forma  consolidated  balance  sheet  as of June  30,  1996 was
prepared  as if the  acquisition  of  the  Terrace  Gardens  facility  had  been
consummated  as of June 30,  1996.  The pro  forma  consolidated  statements  of
operations  for the year ended  December  31, 1995 and the six months ended June
30, 1996 were prepared as if the acquisition of the Terrace Gardens facility had
been  consummated on January 1, 1995. The pro forma  financial  statements  were
prepared  as if the  Company  had  issued  1,639,785  shares  of  Common  Stock,
representing  the  number of shares  required  to be sold by the  Company at the
initial public offering price of $8.00 per share (net of underwriting discounts)
in order for the  Company  to pay the  purchase  price for the  Terrace  Gardens
facility. The Company used the proceeds from its initial public  offering to pay
the purchase price for Terrace Gardens.

         The pro forma  adjustments  are based upon  available  information  and
certain assumptions that management  believes are reasonable.  The unaudited pro
forma  combined  financial  information  set  forth  below  is  not  necessarily
indicative  of the  Company's  combined  financial  position  or the  results of
operations  that  actually  would  have  occurred  if the  transaction  had been
consummated  on the dates  shown.  In  addition,  they are not  intended to be a
projection  of results  of  operations  that may be  obtained  in the  Company's
future.  The unaudited pro forma  consolidated  financial  information should be
read in  conjunction  with the  financial  statements  and related notes thereto
included elsewhere or incorporated by reference in this Report.

                                       -8-
INTEGRATED LIVING COMMUNITIES, INC.
                        UNAUDITED PRO FORMA BALANCE SHEET
                                  JUNE 30, 1996
                             (Dollars in thousands)
ILC                Terrace Gardens
                                                           ---                ---------------
                                                                                       Adjust-           Pro forma
                                                          Actual       Actual          ments(a)        consolidated
                                                          ------       ------          --------        ------------

Assets
Cash and cash equivalents....................        $   120       $   457        $   (457)         $   120
   Accounts receivable..........................            355           387            (387)             355
   Prepaid expenses and other current assets....            407            79             (79)             407
                                                         ------         -----          -------          ------
    Total current assets........................            882           923            (923)             882
                                                         ------        ------         --------          ------
   Assets limited as to use.....................            705           ---                              705
   Property, plant and equipment, net...........         50,626         7,895            4,385          62,906
   Other assets.................................          3,252           133            (133)           3,252
                                                         ------        ------         --------        --------
                                                        $55,465        $8,951          $3,329          $67,745
                                                        =======        ======          =======         =======

Liabilities and Stockholder's Equity

   Accounts payable.............................        $   828       $   176        $   (176)         $   828
   Accrued expenses.............................          1,309           711            (631)           1,389
   Current portion of long-term debt............            ---           324            (324)             ---
                                                         ------        ------         --------          ------
    Total current liabilities...................          2,137         1,211          (1,131)           2,217
                                                        -------       -------        ---------         -------
   Note payable to parent company...............          3,363           ---                            3,363
   Refundable deposits..........................          5,398           ---                            5,398
   Deferred income taxes........................            324           ---                              324
   Unearned entrance fees.......................          3,912           ---                            3,912
   Long-term debt less current portion..........            ---         7,927          (7,927)             ---
                                                         ------       -------        ---------         -------

    Total liabilities...........................         15,134         9,138          (9,058)          15,214
                                                         ------       -------        ---------         -------
   Stockholder's equity

    Common stock, $.01  par  value.  Authorized
    100,000,000 shares; 3,897,900 shares issued
    and outstanding actual and 5,537,685 shares
    issued and outstanding pro forma............             39           ---              16               55

     Additional paid-in capital.................         42,359           ---          12,184           54,543

     Retained earnings (deficit)................         (2,067)         (187)            187           (2,067)
                                                         -------      --------         ------         --------

     Net stockholder's equity...................         40,331          (187)         12,387           52,531
                                                         -------      --------         ------         --------

                                                        $55,465        $8,951          $3,329          $67,745
                                                         =======       ======          ======          =======
-9-
INTEGRATED LIVING COMMUNITIES, INC.
                   UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
                          YEAR ENDED DECEMBER 31, 1995
                    (In thousands, except per share amounts)
ILC             Terrace Gardens
                                                            ---             ---------------

                                                                                                     Pro Forma
                                                          Actual       Actual      Adjustments       Consolidated
                                                          ------       ------      -----------       ------------

Revenues:
Monthly service and entrance fees............        $15,123        $5,642                          $20,765
   Management services and other................          1,146           301                            1,447
                                                        -------        ------                           ------
     Total revenues.............................         16,269         5,943                           22,212
                                                        -------        ------                           ------
Expenses:
   Facility operations..........................         11,243         4,068                           15,311
   Facility rents...............................          2,430           ---                            2,430
   Corporate administrative and general.........          1,005           546                            1,551  
                                                  
   Depreciation and amortization................            415           345          $(47)(b)            713 
   Loss on impairment                           
     of long-lived assets.......................          5,126            --                            5,126
   Interest.....................................            ---           739          (739)(b)            ---
                                                         ------        ------       -------              -----
     Total expenses.............................         20,219         5,698          (786)            25,131
                                                          ------        -----       -------             ------
Earnings (loss) before income taxes
  and minority interest..........................        (3,950)          245           786             (2,919)
Minority interest................................             37          ---           ---                 37
                                                           -----        -----          ----              -----
Earnings (loss) before income taxes..............        (3,987)      $   245       $   786             (2,956)
                                                                      =======       =======            ========
     Federal and state income taxes..............          (643)                                          (246)(c)
                                                         -------                                       --------
Net loss.........................................       $(3,344)                                      $ (2,710)
                                                        ========                                      =========

Net earnings per common share....................       $  (.86)                                       $  (.49)
                                                        ========                                       ========
Weighted average shares outstanding..............          3,898                                         5,538
                                                         =======                                       ========
-10-
INTEGRATED LIVING COMMUNITIES, INC.
                   UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
                         SIX MONTHS ENDED JUNE 30, 1996
                    (In thousands, except per share amounts)
ILC              Terrace Gardens
                                                        ---              ---------------

                                                                                                     Pro forma
                                                        Actual        Actual         Adjustments    Consolidated
                                                        ------        ------         -----------    ------------

Revenues:
Monthly service and entrance fees............        $10,568       $2,467                           $13,035
   Management services and other................            727          157                               884
                                                         ------       ------                           -------
     Total revenues.............................         11,295        2,624                            13,919
                                                         ------        -----                            ------
Expenses: 
   Facility operations..........................          7,138        1,966                             9,104
   Facility rents...............................          1,309          ---                             1,309
   Corporate administrative and general.........            678          245                               923
   Depreciation and amortization................            480          173            $(24)(b)           629
   Interest.....................................            ---          339            (339)(b)           ---
                                                         ------        -----            --------        ------
     Total expenses.............................          9,605        2,723               (363)        11,965
                                                         ------        -----             -------      --------
Earnings (loss) before income taxes.............          1,690       $  (99)            $  363          1,954
                                                                     =======              ======
Federal and state income taxes..................            651                                            752 (c)
                                                         ------                                        -------
Net earnings....................................       $  1,039                                        $ 1,202
                                                       ========                                       ========
Net earnings per common share...................       $    .27                                        $   .22
                                                       ========                                        =======
Weighted average shares outstanding.............          3,898                                          5,538
                                                       ========                                        =======
-11-
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

Pro Forma Adjustments

(a)   To reflect the purchase price of, and estimated  transaction costs related
      to, the  acquisition of the Terrace  Gardens  facility and the issuance of
      1,639,785  shares of Common Stock,  representing the number of shares sold
      by the Company at the  initial  public  offering  price of $8.00 per share
      (net of  underwriting  discounts)  in  order  for the  Company  to pay the
      purchase  price for the Terrace  Gardens  facility,  and to eliminate  the
      assets and liabilities retained by the seller.

(b)   To reflect the impact of the  Company's new basis in the assets of Terrace
      Gardens and the elimination of amortization of deferred financing fees and
      interest  expense on debt not assumed.  The Company assumed a 40 year life
      for building and improvements and a 10 year life for equipment.

(c)   To adjust consolidated income tax expense for the effect of the adjustment
      above.

    

                                      -12-
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.

Date:    October 23, 1996

                                       INTEGRATED LIVING COMMUNITIES, INC.

                                       By: /s/ John B. Poole
                                          --------------------------------------
                                          John B. Poole

                                          Senior Vice President--Chief Financial
                                                   Officer 

                                      -13-