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)

                                 June 4, 2001
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                      Avalon Correctional Services, Inc.
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            (Exact name of Registrant as specified in its Charter)


      Nevada                        0-20307                 13-3592263
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(State or other jurisdiction                  (Commiss       (IRS Employer
of incorporation)                                           Identification No.)


                              13401 Railway Drive
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                  (Address of principal executive offices)         (Zip Code)

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















INFORMATION TO BE INCLUDED IN THE REPORT


ITEM 5.   OTHER EVENTS

Avalon  Correctional  Services,  Inc., is issuing a press release to discuss the
financial outlook of Avalon Correctional Services, Inc., for fiscal 2001.

ITEM 7.     FINANCIAL STATEMENTS AND EXHIBITS

(c)   The following is filed as an Exhibit to this report:

      Exhibit No.       Description of Exhibit

      99.1              Press Release


SIGNATURE

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


AVALON CORRECTIONAL SERVICES, INC.



s// Donald E. Smith
DONALD E. SMITH
Chairman of the Board and
Chief Executive Officer

Dated: June 4, 2001



  


                                                                    Exhibit 99.1
Avalon
Correctional Services, Inc.                                         News Release

13401 Railway Drive
Oklahoma City, Oklahoma  73114
Phone 405-752-8802 or 1-800-919-9113
Fax 405-752-8852
Email:  t_smith@avaloncorrections.net
Contact:  Tiffany Smith, Vice President Corporate Communications


                 Avalon  Correctional  Services,  Inc.
               Provides Financial Outlook for Fiscal 2001

OKLAHOMA  CITY,  Oklahoma,  June  4,  2001-Avalon  Correctional  Services,  Inc.
(NASDAQ:   CITY),  a  leading  owner  and  operator  of  community  correctional
facilities and  alternative  correctional  programs,  today provided a financial
outlook for the second,  third,  and fourth quarters of fiscal 2001.

Net  revenue  for the second  quarter  ending  June 30,  2001 is  expected to be
approximately  $5.96 million  compared to $5.4 million for the second quarter of
2000. Net revenue for the third quarter ending September 30, 2001 is expected to
be approximately  $6.2 million compared to $6.0 million for the third quarter of
2000. Net revenue for the fourth quarter ending December 31, 2001 is expected to
be  approximately  $6.9 million compared to $6.17 million for the fourth quarter
of 2000. Net revenue for the twelve months ending  December 31, 2001 is expected
to be $25.1  million  compared  to $22.9  million  for the twelve  months  ended
December 31, 2000.

Earnings Before Interest,  Taxes,  Depreciation and Amortization  ("EBITDA") for
the second  quarter  ending June 30, 2001 is expected to be  approximately  $1.5
million compared to $1.4 million for the second quarter of 2000.  EBITDA for the
third quarter ending  September 30, 2001 is expected to be  approximately  $1.59
million compared to $1.57 million for the third quarter of 2000.  EBITDA for the
fourth quarter ending  December 31, 2001 is expected to be  approximately  $1.69
million compared to $1.58 million for the fourth quarter of 2000. EBITDA for the
twelve months ending December 31, 2001 is expected to be $6.25 million  compared
to $5.9 million for the twelve  months ended  December  31,  2000.

Income Before Taxes for the second  quarter  ending June 30, 2001 is expected to
be approximately  $290,000  compared to $229,000 for the second quarter of 2000.
Income Before Taxes for the third quarter ending  September 30, 2001 is expected
to be approximately $390,000 compared to $255,000 for the third quarter of 2000.
Income Before Taxes for the fourth quarter ending  December 31, 2001 is expected
to be  approximately  $429,000  compared to $264,000  for the fourth  quarter of
2000.  Income  Before Taxes for the twelve  months  ending  December 31, 2001 is
expected to be $1.3  million  compared to $963,000  for the twelve  months ended
December 31,  2000.

"The  recent  expansion  of  our  management  team  has  resulted  in  increased
utilization  of our existing  facilities.  We continue  developing  programs for
organic  growth and expansion of  alternative  correctional  services to enhance
existing services while requiring minimal capital  expenditures," said Donald E.
Smith,  Chairman and Chief Executive Officer. "We recently announced the opening
of the Riverside  Intermediate  Sanction Unit,  ("Riverside  ISU") a new 360 bed
facility  scheduled  to open in the last  half of 2001 in Tulsa,  Oklahoma.  The
Riverside ISU will increase the  Company's  total bed capacity by  approximately
20% and have a significant impact on operating results."



Avalon  Correctional  Services,  Inc.  is a leading  developer  and  manager  of
privatized  community  correctional  facilities  and  alternative   correctional
programming in the United States. Avalon currently has a total offender capacity
of 2,060  beds in  Oklahoma,  Colorado  and  Texas,  in  addition  to  providing
alternative programming for approximately 1,000 offenders.  For more information
about  Avalon  contact  our  web  site  at   www.avaloncorrections.com  or  call
1-800-919-9113

"Safe Harbor"  Statement under the Private  Securities  Litigation Reform Act of
1995

These  statements  are  based on  current  expectations.  These  statements  are
forward-looking, and actual results may differ materially. Certain statements in
this release  constitute  forward-looking  statements or statements which may be
deemed or construed to be  forward-looking  statements within the meaning of the
Private  Securities  Litigation  Reform  Act  of  1995.  The  words  "forecast,"
"estimate,"  "project,"  "intend,"  "expect,"  "should,"  "would,"  and  similar
expressions  and all statements  which are not historical  facts are intended to
identify forward-looking  statements.  These forward-looking  statements involve
and are  subject to known and unknown  risks,  uncertainties  and other  factors
which  could cause the  Company's  actual  results,  performance  (financial  or
operating)  or  achievements  to differ  from the  future  results,  performance
(financial  or  operating)  or   achievements   expressed  or  implied  by  such
forward-looking  statements. For a more detailed description of the factors that
could cause such a difference,  please see Avalon's  filings with the Securities
and  Exchange  Commission  including  its  Annual  Report on Form  10-K.  Avalon
undertakes  no obligation  to update or revise any  forward-looking  statements,
whether as a result of new information, future events or otherwise.