FEDERAL AFFORDABLE HOUSING CORPORATION




                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-QSB


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


                For the Quarterly Period Ended February 28, 1999



                     FEDERAL AFFORDABLE HOUSING CORPORATION
                     --------------------------------------
        (Exact Name of Small Business Issuer as Specified in its Charter)



         Minnesota                                            59-3169033
         ---------                                            ----------
  (state or other Jurisdiction                              (IRS Employer
of incorporation or organization)                         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



         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 ]

         As of February  28,  1999,  there were  493,500  shares of Common Stock
outstanding and 7,450 Investor's Stock Purchase Warrants outstanding.

         Transitional Small Business Disclosure Format:

 Yes [  ]  No [ X ]

<PAGE>

                     FEDERAL AFFORDABLE HOUSING CORPORATION


                                      Index



                                                                            Page
Part I - Financial Information


Item 1.    Consolidated Financial Statements


                  Consolidated Balance Sheets -
                    February 28, 1999 and May 31, 1998........................1


                  Consolidated Statements of Operations -
                    Nine months ended February 28, 1999 and 1998..............2


                  Consolidated Statements of Cash Flows -
                      Nine months ended February 28, 1999 and 1998............3


                  Notes to Consolidated Financial Statements..................4


Item 2.    Management's Discussion and Analysis of Financial
                      Condition and Results of
Operations................................................................5 - 6


Part II - Other Information


Item 1. Legal
Proceedings...................................................................7


Item 6. Exhibits and reports on Form 8k.......................................7



                  Signatures..................................................7


Exhibit 11....................................................................8


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<PAGE>


                     FEDERAL AFFORDABLE HOUSING CORPORATION

                                 Balance Sheets


                                     Assets

<TABLE>
<CAPTION>
                                                                                   February 28,              May 31,
                                                                                       1999                    1998
                                                                                --------------------   ---------------------
                                                                                    (Unaudited)

<S>                                                                        <C>                      <C>
Current assets
   Operating cash in bank                                                    $               12,845 $                68,214
   Due from Suncoast Food Services, Inc.                                                     22,343                       -
   Construction in process:
      Land costs/site development                                                             7,273                   7,273
                                                                                --------------------   ---------------------

          Total current assets                                                               42,461                  75,487
                                                                                --------------------   ---------------------

Other assets
   Incorporation fees, legal expenses and registration
   statement costs - unamortized                                                             34,260                  34,260
   Utility deposits                                                                             424                     424
   Notes receivable                                                                          15,000                       -
   Mortgages receivable                                                                     242,662                 241,475
                                                                                --------------------   ---------------------
                                                                                            292,346                 276,159
                                                                                --------------------   ---------------------


          Total assets                                                                      334,807                 351,646
                                                                                ====================   =====================


                      Liabilities and Stockholders' Equity

Current liabilities
   Due to RemProp, Inc.                                                                      13,198                  24,713
   Due to Key Management, Inc.                                                               18,632                  18,632
   Note payable, R. Metz, demand, bearing interest at 7%                                      7,943                   7,943
                                                                                --------------------   ---------------------

          Total current liabilities                                                          39,773                  51,288
                                                                                --------------------   ---------------------


Stockholders' equity
   Common stock, no par value
      Authorized 20,000,000 shares,
      493,500 issued and outstanding                                                        486,887                 486,887
   Contributed capital                                                                       70,000                  40,000
   Accumulated deficit                                                                     (261,853)               (226,529)
                                                                                --------------------   ---------------------

          Total stockholders' equity                                                        295,034                 300,358
                                                                                --------------------   ---------------------


          Total liabilities and stockholders' equity                         $              334,807 $               351,646
                                                                                ====================   =====================

</TABLE>


See notes to financial statements.


                                       1
<PAGE>



                                FEDERAL AFFORDABLE HOUSING CORPORATION

                                        Statements of Operations
                                               (Unaudited)




<TABLE>
<CAPTION>




                                                                       For the Nine Months Ended
                                                                              February 28,
                                                              --------------------------------------------
                                                                    1999                      1998
                                                              -----------------         ------------------

<S>                                                         <C>                      <C>
Income
      Sales                                                 $                -        $            79,900

Less cost of sales
      Cost of sales                                                          -                     65,295
                                                              -----------------         ------------------

      Gross profit                                                           -                     14,605

Selling, general and administrative
      expenses                                                          50,943                     14,097
                                                              -----------------         ------------------

Other income (expense)
      Interest Income                                                   15,619                          -
                                                              -----------------         ------------------

                     Net income (loss)                      $          (35,324)       $               508
                                                              =================         ==================


Basic income (loss) per common share                        $           (0.072)       $             0.001
                                                              =================         ==================

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

</TABLE>


See notes to financial statements.

                                       2
<PAGE>


                                       FEDERAL AFFORDABLE HOUSING CORPORATION

                                              Statements of Cash Flows
                                                     (Unaudited)




<TABLE>
<CAPTION>




                                                                                       For the Nine Months Ended
                                                                                              February 28,
                                                                                   -----------------------------------
                                                                                        1999                1998
                                                                                   ----------------    ---------------

<S>                                                                            <C>                  <C>
Cash flows from operating activities:
   Reconciliation of net loss to net cash
     used in operating activities
       Net income (loss)                                                       $           (35,324) $             508
       Adjustments to reconcile net loss to net
         cash used in operating activities
         Amortization of fees and costs                                                          -                  -
       Changes in assets and liabilities
         Net decrease in intercompany loans,
         Construction in process, fees
         and costs, and deposits                                                                 -             43,501
                                                                                   ----------------    ---------------
               Net cash used in operating activities                                       (35,324)            44,009
                                                                                   ----------------    ---------------

Cash flows from investing activities
   Contributed capital                                                                      30,000                  -
   Reduction to certificate of deposit                                                           -            300,000
   Increase in notes receivable                                                            (38,530)           (19,975)
                                                                                   ----------------    ---------------
               Net cash used in investing activities                                        (8,530)           280,025
                                                                                   ----------------    ---------------

Cash flows from financing activities
   Principal payments on notes payable                                                     (11,515)          (326,202)
                                                                                   ----------------    ---------------
               Net cash provided by financing activities                                   (11,515)          (326,202)
                                                                                   ----------------    ---------------

               Net increase (decrease) in cash                                             (55,369)            (2,168)

Cash beginning                                                                              68,214              3,845
                                                                                   ----------------    ---------------

Cash ending                                                                    $            12,845  $           1,677
                                                                                   ================    ===============


</TABLE>


See notes to financial statements.

                                       3
<PAGE>

                     FEDERAL AFFORDABLE HOUSING CORPORATION

                          Notes to Financial Statements
                                   (Unaudited)





Note 1 - Basis of presentation

The accompanying unaudited financial statements,  which are for interim periods,
do not include all  disclosures  provided  in the annual  financial  statements.
These  unaudited  financial  statements  should be read in conjunction  with the
financial  statements  and  the  footnotes  thereto  contained  in  the  Audited
Financial  Statements  for the year  ended  May 31,  1998  and  1997 of  Federal
Affordable Housing Corporation. (the "Company").

In the opinion of the Company,  the accompanying  unaudited financial statements
contain all adjustments  (which are of a normal and recurring  nature) necessary
for a fair presentation of the financial  statements.  The results of operations
for the nine month period ended February 28, 1999 are not necessarily indicative
of the results to be expected for the full year.


Note 2 - Per share calculations

Per share data was computed by dividing net loss by the weighted  average number
of shares  outstanding during the nine month period ended February 28, 1999. The
weighted average shares  outstanding for the nine months ended February 28, 1999
and 1998 were 493,500.


Note 3 - Subsequent events

Please refer to the Audited  Financial  Statements  consisting  of the Company's
balance sheet as of May 31, 1998, and related statements of operations,  changes
in stockholders  equity,  and cash flows ended May 31, 1998. Please refer to the
form 8K dated March 5, 1999 and filed June 17, 1999.



                                       4
<PAGE>

                     FEDERAL AFFORDABLE HOUSING CORPORATION


Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The  statements  contained  in this Report on Form  10-QSB,  that are not purely
historical, are forward-looking information and statements within the meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange  Act  of  1934.  These  include  statements   regarding  the  Company's
expectations,   intentions,   or  strategies   regarding  future  matters.   All
forward-looking  statements  included in this document are based on  information
available  to the Company on the date  hereof.  It is important to note that the
Company's  actual results could differ  materially  from those projected in such
forward-looking  statements  contained in this Form 10-QSB. The  forward-looking
statements  contained  here-in are based on current  expectations  that  involve
numerous risks and uncertainties.  Assumptions relating to the foregoing involve
judgments  regarding,  among  other  things,  the  Company's  ability  to secure
financing  or  investment  for  capital   expenditures,   future   economic  and
competitive market conditions,  and future business decisions. All these matters
are  difficult  or  impossible  to predict  accurately  and many of which may be
beyond the  control of the  Company.  Although  the  Company  believes  that the
assumptions underlying its forward-looking statements are reasonable, any of the
assumptions could be inaccurate and,  therefore,  there can be no assurance that
the  forward-looking  statements  included  in this form 10-QSB will prove to be
accurate.

GENERAL

The company was established to develop residential subdivisions,  and construct,
market and sell affordable homes in the Tampa,  Florida market.  The company was
organized on March 5, 1993,  as a Minnesota  corporation  and completed a public
offering on June 6, 1995 and received net proceeds of $359,336.

The Company's plan of operation for the 12 month period ended May 31, 1999 calls
for continued development of infrastructure scaled according to the net proceeds
of its offering and aggressive  marketing.  Management believes that the balance
remaining of its net proceeds of $359,336  from its  offering is  sufficient  to
carry out its plan of  operation  for the twelve  months  through May 31,  1999,
without revenues from operations.

The Company  anticipates  that its major expense  during the twelve month period
ending May 31,  1999 will be  infrastructure  development.  Upon  completion  of
infrastructure development,  the company anticipates that its only expenses will
be  executive  compensation,  real  estate  taxes,  general  corporate  purposes
(including  marketing  and  sales)  and  perhaps  model  home  construction.  In
addition,  the  Company  plans to limit  additional  property  acquisitions  and
infrastructure  development  until  purchase  agreements  have been executed for
approximately  half of the developed lots. The Company believes that its plan of
scaled infrastructure  development and limitation on acquisition and development
will enable it to operate with the net proceeds of its public offering,  without
revenues from operations, for the twelve month period ending May 31, 1999.

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 five lots, and the option for 81 additional  lots,  the company  acquired an
additional  seven  lots.  All of the lots  have  been  sold as of May 31,  1998.
Construction  costs of $7,274 for site  development and homes have been incurred
for the parcel of land called Dade City  development.  Although the land has not
been  acquired  as of May 31,  1998,  these  expenditures  have been paid by the
company for future development.


                                       5
<PAGE>

                     FEDERAL AFFORDABLE HOUSING CORPORATION


RESULTS OF OPERATIONS


Nine months ended  February 28, 1999 compared to nine months ended  February 28,
1998

There were no revenues for the nine months ended  February 28, 1999  compared to
$79,900 for the same period of 1998. Revenues for the nine months ended February
28, 1998 were attributed to the sale of a home on lot 22.

Cost of goods sold for the nine month period  ended  February 28, 1999 were zero
compared to $65,295 for the same  period in 1998  attributed  to the sale of the
home on lot 22.

For the nine month period ended February 28, 1999,  total  selling,  general and
administrative  expenses were  $50,943,  as compared to $14,097 for the previous
nine month  period,  an increase of $36,846 or 261%.  This increase was due to a
$30,000 disclosure requirement in SAB 1:B regarding compensation expense for the
fair value of services  provided by management.  The company records $10,000 per
quarter for the fair value of these services.

Interest  income  increased  from  zero to  $15,619  for the nine  months  ended
February 28, 1998 and 1999.  This  increase in interest  income is attributed to
the mortgage receivable and note receivables from the sales of homes and lots in
the fiscal year ended May 31, 1998.

Net loss was $35,324 for the nine month  period  ended  February  28,  1999,  as
compared  to a net  income of $508 for the  previous  nine  month  period  ended
February 28, 1998. This increase net loss for the nine months ended February 28,
1999 was primarily  attributable to a $30,000 disclosure  requirement in SAB 1:B
regarding  compensation  expense  for the fair  value of  services  provided  by
management which increased general and administrative expense.

LIQUIDITY AND FINANCIAL RESOURCES

At February 28, 1999, the company had a cash balance of $12,845,  as compared to
$68,214 in cash for the previous nine months ended February 28, 1998. Cash flows
provided  by  operations  for the nine month  period  ended  February  28,  1999
decreased to $(35,324) from $44,009 for the same period in 1998. The decrease in
cash and cash  equivalents  in the period ended February 28, 1999 was attributed
to payment of notes  payable of $11,515 and  increases  in notes  receivable  of
$38,530.

INFLATION

The amounts presented in the financial  statements do not provide for the effect
of inflation on the company's  operations or its financial  position.  It is not
expected that inflation will have a material impact on the Company's business in
the foreseeable future.


                                       6

<PAGE>
                     FEDERAL AFFORDABLE HOUSING CORPORATION


                           PART II - OTHER INFORMATION


Item 1. Legal Proceedings

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


Item 6. Exhibits and reports on Form 8k

         Not applicable




                                   SIGNATURES

         In accordance with the requirements 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


Date: June 14, 1999

                         By:     /s/ Richard E. Metz
                            ---------------------------------------------
                                 Richard E. Metz
                                 President & CEO


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