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, 1998

                        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: $481,400

The aggregate  market value of the voting stock  (assumed to be 223,500  shares)
held by  nonaffilliates  of registrant  (computed by reference to recent bid and
ask prices of $2.00 and $3.00, respectively) was approximately $558,750

As of January 27, 1999,  there were 493,500  shares of Common Stock  outstanding
and 74,500 Investors' Stock Purchase Warrants outstanding.

                                       1
<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
ARegistrant"  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:  (727)
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 1998

                  The following  table shows,  for the fiscal year ended May 31,
1998,  annual  remuneration  of  each  of  the  Registrant's  two  officers  and
directors:

                                       2
<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, 1998, 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 January 27, 1999.

                  (c)      Dividends

                         The Registrant  paid dividends in the fiscal year ended
                    May 31, 1998 of $67,271. These dividends consisted of common
                    stock of Suncoast Foods, Inc. which was issued in payment of
                    a note receivable on the Company's books of $67,271.

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, 1998 and 1997.
                           Statement of Operations and Retained  Earnings - Year
                           Ended   May  31,   1998  and   1997.   Statement   of
                           Stockholders'  Equity - Year  Ended May 31,  1998 and
                           1997.  Statement  of Cash  Flows - Year Ended May 31,
                           1998 and 1997.
                           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


January 27, 1999
                                              BY:    /s/ Richard E. 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     January 27, 1999
---------------------    -----------------------------------
Richard E. Metz          Director (Principal Executive Officer)

/s/ Wayne A. Weyrauch.   Vice-President of Finance,             January 27, 1999
--------------------     -----------------------------------
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
                                January 27, 1999


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,  1998  and  1997  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
January 27, 1999

                                       8
<PAGE>



                                       FEDERAL AFFORDABLE HOUSING CORPORATION

                                                   Balance Sheets


                                                       Assets
<TABLE>
<CAPTION>

                                                                                     May 31,            May 31,
                                                                                       1998               1997
                                                                                 -----------------  -----------------


<S>                                                                             <C>                <C>
Current assets
   Operating cash in bank                                                        $         68,214   $          3,845
   Certificate of deposit, Suntrust                                                             -            300,000
   Due from Suncoast Food Services, Inc.                                                        -             67,271
   Construction in process:
     Land costs/site development                                                            7,273            237,964
     Houses                                                                                     -            146,604
                                                                                 -----------------  -----------------

         Total current assets                                                              75,487            755,684
                                                                                 -----------------  -----------------

Other assets
   Incorporation fees, legal expenses and registration
   statement costs                                                                         34,260             51,390
   Utility deposits                                                                           424                424
   Mortgage receivables                                                                   241,475                  -
                                                                                 -----------------  -----------------
                                                                                          276,159             51,814
                                                                                 -----------------  -----------------


         Total assets                                                                     351,646            807,498
                                                                                 =================  =================


                                        Liabilities and Stockholders' Equity

Current liabilities
   Due to RemProp, Inc.                                                                    24,713             19,509
   Due to Key Management                                                                   18,632                  -
   Commercial loan payable, SunTrust                                                            -            281,074
   Construction Loans, SunTrust houses                                                          -             95,400
   Note payable, R. Metz, demand, bearing interest at 7%                                    7,943              8,931
                                                                                 -----------------  -----------------

         Total current liabilities                                                         51,288            404,914
                                                                                 -----------------  -----------------


Stockholders' equity
   Common stock, no par value
     Authorized 20,000,000 shares,
     493,500 issued and outstanding                                                       486,887            486,887
   Accumulated deficit                                                                   (186,529)           (84,303)
                                                                                 -----------------  -----------------

         Total stockholders' equity                                                       300,358            402,584
                                                                                 -----------------  -----------------


         Total liabilities and stockholders' equity                              $        351,646   $        807,498
                                                                                 =================  =================

</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,
                                                                              1998                 1997
                                                                         ---------------       -------------

<S>                                                                     <C>                   <C>
Income
     Sales                                                               $      481,400        $     14,178

Less cost of sales
     Cost of sales                                                              457,275                   -
                                                                         ---------------       -------------

     Gross profit                                                                24,125                   -

Selling, general and administrative
     expenses                                                                    68,123              49,936
                                                                         ---------------       -------------

                  Loss from operations                                          (43,998)            (35,758)

Other income
     Interest income                                                              9,044                   -
                                                                         ---------------       -------------

                  Net Loss                                               $      (34,955)       $    (35,758)
                                                                         ===============       =============

Basic loss per common share                                              $        (0.07)       $      (0.07)
                                                                         ===============       =============

Weighted average number of
     common shares outstanding                                                  493,500             493,500
                                                                         ===============       =============


</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, 1996                                                     493,500    $  486,887    $      (48,545)   $      438,342

Net loss for year ended May 31, 1997                                           -             -           (35,758)          (35,758)
                                                                    -------------   -----------   ---------------   ---------------
Balance May 31, 1997                                                     493,500    $  486,887    $      (84,303)   $      402,584

Dividends paid                                                                 -             -           (67,271)          (67,271)

Net loss for year ended May 31, 1998                                           -             -           (34,955)          (34,955)
                                                                    =============   ===========   ===============   ===============
Balance May 31, 1998                                                     493,500    $  486,887    $     (186,529)   $      300,358
                                                                    =============   ===========   ===============   ===============


</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,
                                                                                   1998               1997
                                                                              ---------------    ---------------

<S>                                                                          <C>                <C>
Cash flows from operating activities:
   Reconciliation of net loss to net cash
     used in operating activities
       Net loss                                                               $      (34,955)    $      (35,758)
       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                                                     468,402           (169,146)
                                                                              ---------------    ---------------
               Net cash used in operating activities                                 450,577           (187,774)
                                                                              ---------------    ---------------

Cash flows from investing activities
   Proceeds from sale of investments                                                 300,000                  -
   Increase in notes receivable                                                     (241,475)                 -
                                                                              ---------------    ---------------
               Net cash used in investing activities                                  58,525                  -
                                                                              ---------------    ---------------

Cash flows from financing activities
   Principal payments on notes payable                                              (376,474)           190,400
   Decreases in stockholder loan                                                        (988)                 -
   Dividends paid                                                                    (67,271)
                                                                              ---------------    ---------------
               Net cash provided by financing activities                            (444,733)           190,400
                                                                              ---------------    ---------------

               Net increase (decrease) in cash                                        64,369              2,626

Cash beginning                                                                         3,845              1,219
                                                                              ---------------    ---------------

Cash ending                                                                   $       68,214    $         3,845
                                                                              ===============    ===============



</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.

                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 was
                $17,130 for the year ended May 31, 1998 and 1997.


Note B - DUE FROM SUNCOAST FOOD SERVICES, INC.

                Federal Affordable Housing  Corporation made short-term loans to
                Suncoast Food Services, Inc., secured by a promissory note dated
                March 15, 1996.  This note had  maturity  date of March 31, 1998
                and was  satisified  by Suncoast  Food Services by issuing a 15%
                equity interest in its business.  The common stock was issued as
                a dividend  to the  Company's  shareholders  in the fiscal  year
                ended May 31, 1998. (See Note H).


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 had a term of 12 months,  and bore
                interest at a rate of 4.690%.  This  certificate  of deposit was
                pledged as  collateral  for a revolving  line of credit,  with a
                maximum  draw  down of  $300,000.  The  certificate  of  deposit
                matured on June 27, 1997 and the  proceeds  were used to satisfy
                the Company's line of credit in July 1997.


Note D - CONSTRUCTION IN PROCESS

                The  company  has an  option  to  purchase  74 lots  located  in
                Zephyrhills,  Florida  and Dade City,  Florida,  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 H). Additional costs
                of  construction  for site  development and homes have also been
                incurred.

                                       13
<PAGE>



                     FEDERAL AFFORDABLE HOUSING CORPORATION
                          NOTES TO FINANCIAL STATEMENTS



Note E - SALES OF HOMES AND LOTS

                In the fiscal year ended May 31, 1998,  the Company sold 32 lots
                and 3 houses. The Company has a mortgage  receivable of $241,475
                on its books from this transaction at May 31, 1998.

Note F - CONSTRUCTION LOANS

                The Company had secured two  construction  loans on lots #21 and
                #22. Each loan had 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.  These loans were paid in full in the fiscal year
                ended May 31, 1998 with the proceeds from the sale of homes/lots
                on lots #21 and #22.

Note G - STOCK TRANSACTIONS

                On  December  23,  1997,  the  shareholders  voted in favor of a
                three-for-one forward stock split and to increase the authorized
                stock of the Company to twenty million (20,000,000) shares. This
                stock split caused the number of shares  issued and  outstanding
                to increase  from  164,500  shares to 493,500 in the fiscal year
                ended May 31, 1998.

Note H - 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, 1998 and 1997, the  Company  owed  $24,713 and  $19,509,
                respectively  to REMPROP, INC. on an unsecured loan. The Company
                owed $18,632 to Key Management,  Inc. on an unsecured loan as of
                May 31, 1998.

                Richard Metz had loaned  $8,931 to the company on a Demand Note,
                bearing  interest  at 7%.  During the fiscal  year ended May 31,
                1998 a principal  payment of $988 was made by the Company toward
                the balance of this loan. No other  related  party  transactions
                have occurred.

                                       14