SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                   FORM 10-KSB

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                     For the Fiscal Year Ended May 31, 1997

                        Commission File Number 33-67536-A

                     FEDERAL AFFORDABLE HOUSING CORPORATION
                     --------------------------------------
                 (Name of Small Business issuer in its Charter)


                 Minnesota                             59-3169033
                 ---------                             ----------
         (State of Incorporation)           (IRS Employer Identification No.)


1616 Gulf-to-Bay Boulevard, Clearwater, Florida                    34615
-----------------------------------------------                    -----
  (Address of principal executive offices)                       (Zip Code)


        Registrant's telephone number, including area code: (727) 446-7981

Securities Registered Under Section 12(b) of the Exchange Act: None
Securities Registered Under Section 12(g) of the Exchange act: None
Securities Subject to Section 15(d) of the Exchange Act:

         Common Stock, no par value
         Investors' Stock Purchase Warrants

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes [ ] No [X]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained , to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendments to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year: $14,178

The  aggregate  market value of the voting stock  (assumed to be 74,500  shares)
held by  nonaffilliates  of registrant  (computed by reference to recent bid and
ask prices of $7.00 and $8.00, respectively) was approximately $558,750

As of December 5, 1997,  there were 164,500  shares of Common Stock  outstanding
and 74,500 Investors' Stock Purchase Warrants outstanding.

                                       2
<PAGE>

DOCUMENTS INCORPORATED BY REFERENCE:

          1. Registrant's  Final Prospectus,  dated March 10, 1995, (filed under
          Rule 424(b) of the 1933 Act), incorporated by reference into Part I of
          this Annual Report.

          2.  Registrant's   Registration  Statement  on  Form  SB-2  (File  No.
          33-67536-A), effective March 10, 1995.

Transitional Small Business Disclosure Form: Yes [X] No [  ]


INFORMATION REQUIRED IN ANNUAL REPORT OF TRANSITIONAL SMALL BUSINESS ISSUERS.


                                     PART I.


               [Alternative 2 - Items 6-11 Of Model B of Form 1-A]

ITEM 6.           DESCRIPTION OF BUSINESS

                  FEDERAL   AFFORDABLE   HOUSING    CORPORATION    (called   the
"Registrant"  in  this  document)  is  engaged  in  one  industry  segment,  the
development  and  marketing  of  affordable  housing in the Tampa  Bay,  Florida
market.  The  Registrant's  executive  offices are  located at 1616  Gulf-to-Bay
Boulevard,  Clearwater,  Florida  34615,  and its  telephone  number  is:  (813)
446-7981.

                  The balance of the discussion of this item is contained  under
the  captions  "Business"  and  "Plan of  Operations"  on pages 17  through  29,
inclusive, of the Registrant's Final Prospectus,  dated March 10, 1995, which is
incorporated by reference.

ITEM 7.           DESCRIPTION OF PROPERTY

                  This Item is contained under the captions "Business - Proposed
Developments"  and 'Option to Purchase  Additional Lots' on pages 18 through 23,
inclusive,  and pages 25 through 26,  respectively,  of the  Registrant's  Final
Prospectus, dated March 10, 1995, which is incorporated by reference.

ITEM 8.        DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

Reference  is  made  to  the  material  under  the  captions   "Promoters"   and
"Management"  contained on pages 31 through 33,  inclusive,  of the Registrant's
Final  Prospectus,  dated  March  10,  1995,  which is  incorporated  herein  by
reference.

ITEM 9.      REMUNERATION OF DIRECTORS AND OFFICERS

                  (a) Remuneration for Fiscal Year 1997

                  The following  table shows,  for the fiscal year ended May 31,
1997,  annual  remuneration  of  each  of  the  Registrant's  two  officers  and
directors:

                                       3
<PAGE>


Name                          Capacity                   Aggregate Remuneration
----                          --------                   ----------------------
Richard E. Metz               President, CEO                           $  0
Wayne A. Weyrauch             Vice President, CFO                         0
                                                              Total    $  0

                    (b)   Future Remuneration Pursuant to a Plan

                  See   "Business  -   Compensation   to   Affiliates"   in  the
Registrant's  Prospectus,  dated  March  10,  1995,  which  is  incorporated  by
reference, for a discussion of compensation payments to be made to the Company's
management  in the future.  See also,  'Business  Option to Purchase  Additional
Lots" for a  discussion  of certain  transactions  which might be  construed  as
benefitting the Registrant's management.

ITEM 10.          SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS

                  This  material  is  contained  under  the  caption  "Principal
Shareholders" on pages 36 and 37 of the  Registrant's  Final  Prospectus,  dated
March 10, 1995, which is incorporated by reference.  The information provided in
such location remained accurate as of May 31, 1997, the Registrant's fiscal year
end.

ITEM 11.          INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

                  This  material  is  contained   under  the  caption   "Certain
Transactions" at page 30 of the Registrant's  Final Prospectus,  dated March 10,
1995, which is incorporated by reference.


                                    PART II.

ITEM 1. MARKET PRICE OF, AND  DIVIDENDS ON, THE  REGISTRANT'S  COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS

                  (a)   Market Information

                  (b)   Holders

                  There  were  eleven  registered  holders  of the  Registrant's
common equity as of December 8, 1997.

                  (c)   Dividends

                  The  Registrant  has never paid dividends on its common equity
and does not expect to do so for the foreseeable future.

ITEM 2.  LEGAL PROCEEDINGS

                  The   Registrant  is  not  currently  a  party  to  any  legal
proceedings.

                                       3
<PAGE>


ITEM 3.  CHANGES IN, AND DISAGREEMENTS WITH, ACCOUNTANTS

                  Not Applicable.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  Not Applicable.

ITEM 5.  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

                  Not Applicable.

ITEM 6.  REPORTS OF FORM 8-K

                  Not Applicable.

                                    PART F/S


          The following financial statements of the Registrant appear at the end
          of this report:

                    Balance  Sheets  - May  31,  1997  and  1996.
                    Statement of Operations and Retained Earnings - Year Ended
                    May 31, 1997 and 1996.
                    Statement of Stockholders'  Equity - Year Ended May 31, 1997
                    and 1996.
                    Statement of Cash Flows - Year Ended May 31, 1997 and 1996.
                    Notes to Financial Statements.


                                    PART III


ITEM 1.           INDEX TO EXHIBITS

                  All of the items below are  incorporated  by  reference to the
Registrant's Registration Statement on Form SB-2, File No. 33-67536-A, effective
March 10, 1995.

NUMBER                   DESCRIPTION

2.1      Articles of Incorporation of the Registrant (Exhibit 3.A. to Form SB-2)

2.2      Bylaws of the Registrant (Exhibit 3.B. to Form SB-2)

3.1      Form of Common Stock Certificate (Exhibit 4.A. to Form SB-2)

3.2      Form of Investors' Stock Purchase Warrant Certificate
         (Exhibit 4.B. to Form SB-2)

6.1      Option Agreement Between Registrant, RemProp, Inc. and Key
         Management, Inc. (Exhibit 10.A. to Form SB-2)


                                       4
<PAGE>


6.2      First Amendment to Option Agreement (Exhibit 10.B. to Form SB-2)

6.3      Second Amendment to Option Agreement (Exhibit 10.C. to Form SB-2)

6.4      Lease Agreement between Registrant and RemProp, Inc.
         (Exhibit 10.D. to Form SB-2)

12.1     Registrant's Registration Statement on Form SB-2, as amended

12.2     Registrant's Final Prospectus, dated March 10, 1995, filed under Rule
         424(b) of the 1933 Act.


ITEM 2.           DESCRIPTION OF EXHIBITS

                  The Index to Exhibits was prepared with  reference to items 2,
3, 5, 6 and 7 of Item 2 of Part III of Form 1-A (as  required  by Item 2 of Part
III of this Form 10-KSB.

Supplemental  Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Exchange Act by Non-reporting Issuers.

                  As of the date  hereof,  the  Registrant  has not prepared nor
sent to any of its security holders any of the following:

     1. Any annual report to security  holders  covering the  Registrant's  last
     fiscal  year;  and

     2. Any proxy statement,  form of proxy or other proxy  soliciting  material
     with respect to any annual or other meeting of security holders.

                  If the  Registrant  decides to prepare  and  furnish  any such
report or proxy  material to security  holders  subsequent  to the filing of the
annual report on this Form, the Registrant shall furnish copies of such material
to the Commission when it is sent to security holders.


                                       5

<PAGE>

                                   SIGNATURES

                  In  accordance  with Section 13 or 15(d) of the Exchange  Act,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                     FEDERAL AFFORDABLE HOUSING CORPORATION


December 8, 1997
                                    BY:    /s/ Richard F. Metz
                                    --------------------------------------
                                    Richard E. Metz, President, CEO

                  In  accordance  with the  Exchange  Act,  this report has been
signed below by the  following  persons on behalf of the  Registrant  and in the
capacities and on the dates indicated.



         Name                    Title/Capacity                       Date

/s/Richard E. Metz       President, Chief Executive Officer    December 8, 1997
----------------------   ----------------------------------
Richard E. Metz          Director (Principal Executive Officer)

/s/Wayne A. Weyrauch.    Vice-President of Finance,            December 8, 1997
----------------------   ----------------------------------
Wayne A. Weyrauch        Chief Financial Officer, Secretary
                         (Principal Financial Officer,
                          Principal Accounting Officer)


                                       6

<PAGE>

                     FEDERAL AFFORDABLE HOUSING CORPORATION



                                TABLE OF CONTENTS



                                                                    PAGE
                                                                   ------

ACCOUNTANT'S REPORT PAGE                                              8

BALANCE SHEETS                                                        9

STATEMENTS OF OPERATIONS                                             10

STATEMENTS OF STOCKHOLDERS' EQUITY                                   11

STATEMENTS OF CASH FLOWS                                             12

NOTES TO FINANCIAL STATEMENTS                                     13 & 14


                                       7
<PAGE>

                          J. MICHAEL DAILY & ASSOCIATES
                          Certified Public Accountants
                            1822 Drew Street, Suite 1
                            Clearwater, Florida 34625
                                  727-447-6860
                                Fax 727-441-1840

                                                                         Members
                                                              American Institute
                                                             of Certified Public
                                                                     Accountants

                                                               Florida Institute
                                                             of Certified Public
                                                                     Accountants
                                 August 22, 1997


Board of Directors
Federal Affordable Housing Corporation
1616 Gulf-to-Bay Blvd.
Clearwater, Florida 34615

Gentlemen:

We have audited the accompanying  balance sheets of Federal  Affordable  Housing
Corporation  as of  May  31,  1997  and  1996  and  the  related  statements  of
operations, changes in stockholders' equity, and cash flows for the periods then
ended.  These  financial  statements  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Federal  Affordable  Housing
Corporation  as of as of May 31, 1997 and 1996 and the results of its operations
and its cash flows for the  periods  then  ended in  conformity  with  generally
accepted accounting principles.


/s/ J. Michael Daily
--------------------------------
J. Michael Daily, CPA

Clearwater, Florida
August 22, 1998


                                       8
<PAGE>

                     FEDERAL AFFORDABLE HOUSING CORPORATION

                                 Balance Sheets


                                     Assets

<TABLE>
<CAPTION>

                                                                                       May 31,             May 31,
                                                                                        1997                1996
                                                                                  ------------------  ------------------


<S>                                                                             <C>                 <C>    
Current assets
   Operating cash in bank                                                        $            3,845  $            1,219
   Certificate of deposit, Suntrust                                                         300,000             300,000
   Due from Suncoast Food Services, Inc.                                                     67,271              35,849
   Construction in process:
     Land costs/site development                                                            237,964             224,669
     Houses                                                                                 146,604               2,635
                                                                                  ------------------  ------------------

         Total current assets                                                               755,684             564,372
                                                                                  ------------------  ------------------

Other assets
   Incorporation fees, legal expenses and registration
   statement costs - unamortized                                                             51,390              68,520
   Utility deposits                                                                             424                 455
                                                                                  ------------------  ------------------
                                                                                             51,814              68,975
                                                                                  ------------------  ------------------


         Total assets                                                                       807,498             633,347
                                                                                  ==================  ==================


                                         Liabilities and Stockholders' Equity

Current liabilities
   Due to RemProp, Inc.                                                                      19,509                   -
   Commercial loan payable, SunTrust                                                        281,074             186,074
   Construction Loans, SunTrust houses                                                       95,400                   -
   Note payable, R. Metz, demand, bearing interest at 7%                                      8,931               8,931
                                                                                  ------------------  ------------------

         Total current liabilities                                                          404,914             195,005
                                                                                  ------------------  ------------------


Stockholders' equity
   Common stock, no par value
     Authorized 5,000,000 shares,
     164,500 issued and outstanding                                                         486,887             486,887
   Accumulated deficit                                                                      (84,303)            (48,545)
                                                                                  ------------------  ------------------

         Total stockholders' equity                                                         402,584             438,342
                                                                                  ------------------  ------------------


         Total liabilities and stockholders' equity                              $          807,498  $          633,347
                                                                                  ==================  ==================



</TABLE>

See notes to financial statements.

                                       9
<PAGE>

                     FEDERAL AFFORDABLE HOUSING CORPORATION

                            Statements of Operations

<TABLE>
<CAPTION>


                                                                                For the Years Ended
                                                                         -----------------------------------                
                                                                            May 31,              May 31,
                                                                              1997                 1996
                                                                         ---------------       -------------     

<S>                                                                   <C>                 <C>
Income
     Interest Earned                                                   $         14,178      $       15,746

Selling, general and administrative
     expenses                                                                    49,936              64,060
                                                                         ---------------       ------------- 

                  Net loss                                             $        (35,758)     $      (48,314)
                                                                         ===============       =============
                                                   

Basic loss per common share                                            $          (0.22)     $        (0.29)
                                                                         ===============       =============
                                                           
Weighted average number of
     common shares outstanding                                                  164,500             164,500
                                                                         ===============       =============
                                                           
</TABLE>

See notes to financial statements.


                                       10
<PAGE>

                     FEDERAL AFFORDABLE HOUSING CORPORATION

                  Statements of Changes in Stockholders' Equity


<TABLE>
<CAPTION>



                                                                            Common Stock
                                                                    ---------------------------
                                                                       Number of                     Accumulated
                                                                        Shares         Amount          Deficit            Total
                                                                    -------------   -----------   ---------------   ---------------
<S>                                                                 <C>            <C>           <C>              <C> 
Balance May 31, 1995                                                    90,000        $ 58,512      $    (231)          $ 58,281

On June 6, 1995,  the Company  received net  proceeds of $359,336
from a public offering of 74,500  units.  Each unit  consists of 
one share of common stock and one warrant to purchase common stock.
Each unit was sold for $5.75.                                           74,500         428,375                           428,375

Net loss for year ended May 31, 1996                                         -               -        (48,314)           (48,314)
                                                                   --------------   -----------   ---------------   ---------------
Balance May 31, 1996                                                   164,500        $486,887      $ (48,545)          $ 438,342

Net loss for year ended May 31, 1997                                         -               -        (35,758)            (35,758)
                                                                   --------------   -----------   ---------------   ---------------
                                                                        
Balance May 31, 1997                                                   164,500        $486,887      $ (84,303)          $ 402,584
                                                                   ==============   ===========   ===============   ===============


</TABLE>


See notes to consolidated financial statements.


                                       11
<PAGE>

                                    FEDERAL AFFORDABLE HOUSING CORPORATION

                                           Statements of Cash Flows


<TABLE>
<CAPTION>

                                                                                     For the Years Ended
                                                                              ----------------------------------
                                                                                 May 31,            May 31,
                                                                                   1997               1996
                                                                              ---------------    ---------------

<S>                                                                          <C>                 <C>    
Cash flows from operating activities:
   Reconciliation of net loss to net cash
     used in operating activities
       Net loss                                                               $      (35,758)     $     (48,314)
       Adjustments to reconcile net loss to net
         cash used in operating activities
         Amortization of fees and costs                                               17,130             17,130
       Changes in assets and liabilities
         Net decrease in intercompany loans,
         Construction in process, fees
         and costs, and deposits                                                    (169,146)          (282,253)
                                                                              ---------------    ---------------
               Net cash used in operating activities                                (187,774)          (313,437)
                                                                              ---------------    ---------------

Cash flows from investing activities
   Addition to certificate of deposit                                                      -           (300,000)
                                                                              ---------------    ---------------
               Net cash used in investing activities                                       -           (300,000)
                                                                              ---------------    ---------------

Cash flows from financing activities
   Proceeds from issuance of common stock                                                  -            428,375
   Proceeds from issuance of notes payable                                           190,400            186,074
                                                                              ---------------    ---------------
               Net cash provided by financing activities                             190,400            614,449
                                                                              ---------------    ---------------
               Net increase (decrease) in cash                                         2,626              1,012

Cash beginning                                                                         1,219                207
                                                                              ---------------    ---------------

Cash ending                                                                   $        3,845      $       1,219
                                                                              ===============    ===============


</TABLE>




See notes to financial statements.

                                       12
<PAGE>


                     FEDERAL AFFORDABLE HOUSING CORPORATION
                          NOTES TO FINANCIAL STATEMENTS



Note A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                This  summary  of  significant  accounting  policies  of Federal
                Affordable  Housing   Corporation  is  presented  to  assist  in
                understanding the company's financial statements.  The financial
                statements  and  notes  are  representations  of  the  company's
                management   who  is   responsible   for  their   integrity  and
                objectivity.  These  accounting  policies  conform to  generally
                accepted  accounting   principles  and  have  been  consistently
                applied in the preparation of the financial statements.

                BUSINESS ACTIVITY

                The company is in the  business of  developing  land for the
                purpose of building and selling residential housing.

                CONSTRUCTION IN PROCESS

                Costs of construction for land and houses are accumulated as the
                costs are expended.  These are short-term contracts,  and income
                will be recorded on the completed contract method of accounting.

                AMORTIZATION OF INCORPORATION AND LEGAL FEES

                Cost of incorporation  and start-up legal fees will be amortized
                over 5 years on a straight-line basis.  Amortization Expense for
                the year ended May 31, 1997 is $17,130.


Note B - DUE FROM SUNCOAST FOOD SERVICES, INC.

               Federal Affordable Housing  Corporation has made short-term loans
               to Suncoast Food  Services,  Inc.,  secured by a promissory  note
               dated March 15, 1996.  This note has a maturity date of March 31,
               1998. The principal amount of the note may rise to $75,000,  with
               interest  due at  maturity  at the higher of 2% of gross sales or
               20%  per  annum.  The  note  is  personally   guaranteed  by  the
               Stockholders'  of Suncoast  Food  Services,  Inc.  Suncoast  Food
               Services,  Inc. is owned 50% by Richard E. Metz, and 50% by Wayne
               A. Weyrauch. (See Note F).

Note C - CERTIFICATE OF DEPOSIT AND COMMERCIAL LOAN - SUNTRUST BANK

               The Company purchased a certificate of deposit in the amount of $
               300,000 on June 27, 1996.  It has a term of 12 months,  and bears
               interest  at a rate of 4.690 %. This  certificate  of deposit has
               been pledged as collateral for a revolving line of credit, with a
               maximum  draw down of $ 300,000.  This credit line is due on July
               3,  1997.  Interest  is paid  monthly  at a rate of  6.625  %. No
               principal  payments  are due during  the term of this  loan.  The
               current note balance as of May 31, 1997 is $ 281,074.

                                       13
<PAGE>


                     FEDERAL AFFORDABLE HOUSING CORPORATION
                          NOTES TO FINANCIAL STATEMENTS


Note D - CONSTRUCTION IN PROCESS

                Land (five lots) to be used for building of residential  housing
                was  acquired on April 27, 1993 from  RemProp,  Inc.,  a Florida
                corporation.  The  consideration  given for the land was  90,000
                shares of  no-par  value  stock  issued to  RemProp,  Inc.  Also
                included was an option to purchase 81 additional lots located in
                Zephyrhills,  Florida and Dade City, Florida.  Subsequent to the
                acquisition  of the 5 lots,  and the  option  for 81  additional
                lots, the company acquired an additional 7 lots. Consequently 74
                lots remain  available  for purchase by the company  pursuant to
                the option  agreement as of October 31, 1994.  The company has a
                commitment  to remit  $12,000 to RemProp,  Inc. upon the sale of
                each lot. The method for determining the valuation of the 58,512
                for  the 12 lots  is  based  on lot  cost  of  4,876  per lot to
                RemProp,  Inc., a related company (See Note C). Additional costs
                of  construction  for site  development and homes have also been
                incurred.

Note E - CONSTRUCTION LOANS

                The Company has secured two  construction  loans on lots #21 and
                #22. Each loan has a maximum draw down of $63,000. As of May 31,
                1997,  draws on the loan for lot #21 were  $63,600,  and for lot
                #22 were  $31,800.  Each  loan  bears  interest  only  paid on a
                monthly basis.

Note F - RELATED PARTY TRANSACTIONS

               RemProp,  Inc.  is a  related  party to the  company.  After  the
               purchase  of the 5 lots,  (Note  B) on  April  27,  1993 the only
               shareholder  of  the  company  was  RemProp,   Inc.,  whose  sole
               shareholder is Richard E. Metz,  President,  Secretary and C.E.O.
               of Federal Affordable Housing Corp. On or about September 1, 1993
               RemProp , Inc. transferred 45,000 shares to Key Management, Inc.,
               whose sole  shareholder  is Wayne A.  Weyrauch,  Vice  President,
               Treasurer,   and  C.F.O.  of  Federal  Affordable  Housing  Corp.
               Subsequent to this transfer the other 7 lots were acquired. As of
               May 31, 1997,  the Company  owed  $19,509 to REMPROP,  INC. on an
               unsecured loan.

               Richard  Metz has loaned  $8,931 to the company on a Demand Note,
               bearing interest at 7%. No other related party  transactions have
               occurred.

Note G - SUBSEQUENT EVENTS

                A  letter  of  intent   between   Federal   Affordable   Housing
                Corporation and La Salle Group Ltd. was issued on April 3, 1997,
                for the  transfer  of stock,  assets,  and cash  between the two
                companies.  A closing  agreement was signed on April 28, 1997 to
                close the transaction.  Paragraph 13 of the closing agreement is
                an unwind  clause,  which  states that in the event that certain
                transactions are not completed timely, then the agreement can be
                cancelled.  On  October  3,  1997,  Federal  Affordable  Housing
                Corporation  exercised the unwind clause, and the transaction in
                the closing agreement were terminated.

                                       14