SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20459
                                   FORM 10-KSB

      ( X ) Annual Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934.

                      For the Year Ended December 31, 1997

      ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.

                  For the transition period from __________ to __________.

                        Commission File Number: 333-06328

                       STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
                   (Exact name of Registrant as specified in its Charter)

      FLORIDA                                            65-0716464
(State of or other jurisdiction of                  (IRS Employer I.D. No.)
incorporation or organization)

                  239 Halliday Park Drive, Tampa, Florida 33612
                     Address of Principle Executive Offices:

                                 (813) 932-2228
                    Registrant's telephone number, including area code:

                Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

                Securities registered pursuant to Section 12(g) of the Act:
                                      NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by 7  Section  13 or 15(d) of the  Securities  Exchange  act of 1934
during  the  preceding  12 months  (or for such other  shorter  period  that the
registrant was required to file such reports),  and (20 has been subject to such
filing requirements for the past 90 days. ___ Yes _X_No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-B is not contained herein and will not be contained, to the best
of  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by  referencing  Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. _____

Issuer's revenues for the most recent fiscal year: $25,449.00

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  at  December  31, 1997 was $0.  Shares of common  stock held by each
officer and director and by each person who owns more that 5% of the outstanding
common  stock  have  been  excluded  in that  such  persons  may be deemed to be
affiliates.  This  determination  of  affiliate  status  is  not  necessarily  a
conclusive determination for other purposes.

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
stock, as of June 15, 1999.
                               1,000 Common Shares

                       Documents Incorporated By Reference
                                      NONE

Transitional small business disclosure format. ___ Yes  _X_No


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<PAGE>

                       Sterling Financial Services of Florida I, Inc.
                                  FORM 10 - KSB

                                Table of Contents


     PART I.
              ITEM 1. Business                               2
              ITEM 2. Properties                            11
              ITEM 3. Legal Proceedings                     11
              ITEM 4. Submission of Matters to a Vote of    11
                      Security Holders

     PART II
              ITEM 5. Market for the Common Equity and
                      Related Stockholder Matters           11
              ITEM 6. Management's Discussion and Analysis  12
                      of Financial Condition and Results
                      of Operations
              ITEM 7. Financial Statements                  14
              ITEM 8. Changes In and Disagreements With     26
                      Accountants on Accounting and
                      Financial Disclosures

     PART III
              ITEM 9  Directors, Executive Officers,
                      Promoters and Control Persons;
                      Compliance with Section 16(a) of the  26
                      Exchange Act
              ITEM 10 Executive Compensation                27

              ITEM 11 Security Ownership of Certain         27
                      Beneficial Owners and Management
              ITEM 12 Certain Relationships and Related     28
                      Transactions
              ITEM 13 Exhibits, Financial Statement         28
                      Schedules and
                      Reports on Form 8-K

                      Signatures                            29


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<PAGE>
                                    PART I.

ITEM 1

BUSINESS

      Sterling  Financial  Services of Florida I, Inc. (the  "Corporation")  was
formed in January 1997 under the laws of the State of Florida primarily to offer
a package of financial services to the sub-prime mobile home industry, including
originating,  purchasing and  refinancing for its own account retail mobile home
installment  sales  contracts (the  "Contracts")  created in connection with the
financing of used as well as new mobile homes (the "Homes"),  selling  Contracts
to other  lenders;  and providing  certain  floor plan  financing to mobile home
dealers (the "Dealers") (collectively, the "Financing Activities"). In addition,
the Corporation  may also (1) purchase,  refurbish and lease or sell new or used
Homes;  (2) buy and  improve  land for  development  of mobile  home  parks (the
"Parks"),  or provide  financing to others for such  purposes;  (3) buy and sell
Parks; and (4) purchase other sub-prime  financial  companies in the mobile home
lending business (collectively, the "Other Activities").

      The Corporation has been offering  subscriptions for a maximum  $9,900,000
of secured notes  payable (the "Notes") in the principal  amount of $1,000 each.
The Notes,  which provide for monthly interest payments at the rate of 10.5% per
annum,  are payable in full on June 30, 2002.  During the period January 3, 1997
(date of inception) to December 31, 1997,  the  Corporation  sold  $1,612,000 of
these  Notes.  Subsequent  to  December  31,  1997,  the  Corporation  has  sold
additional  Notes of  approximately  $6,780,000.  The  offering is  scheduled to
terminate on June 30, 1999.

      The  Corporation  is using the proceeds from the sale of the Notes to fund
its Financing and Other  Activities,  and its  operating  losses.  The Notes are
secured by a first lien on the assets acquired with the proceeds of the offering
or other  assets  acquired  with  funds  obtained  from the  repayment,  sale or
refinancing  or such assets  (these assets are  collectively  referred to as the
"Collateral").  The primary source of payment on the Notes will be payments made
by sub-prime  borrowers  on the  Contracts  (see Mobile Home Finance  Industry -
Sub-Prime Market Segment for definition of a sub-prime borrower).

It was  initially  anticipated  that  approximately  85%  of  the  Corporation's
business  would  involve  originating  and  refinancing   Contracts  created  in
connection  with the financing of primarily used as well as some new Homes.  The
Corporation intended to originate Contracts,  as opposed to purchasing Contracts
at a discount from Dealers or others. As a secondary  activity,  not anticipated
to exceed approximately 15% of the Corporation's  business was the Corporation's
intention to provide  certain floor plan  financing to mobile home  dealers.  In
addition,  from time to time,  it was  anticipated  that the  Corporation  would
participate in Other Activities.  Notwithstanding  such parameters,  most the of
the  Corporation's  outstanding  finance  receivables  have been  purchased at a
discount.  In addition,  a significant  portion of the  Corporation's  available
funds has been invested in a Park (see Item 12-Certain Relationships and Related
Transactions).

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<PAGE>

Risk Factors

      An  investment  in  the  Notes  involves  various  risks,   including  the
following:

o        Because  most of the  borrowers  under  the  Contracts  are  considered
         sub-prime,  the risk of default on the Contracts is greater than if the
         Corporation originated Contracts with A or Prime credit borrowers.

o        Over the past  several  years,  lenders  to  sub-prime  borrowers  have
         experienced increased rates of delinquency, default and credit losses.

o        There are various conflicts of interest resulting from the relationship
         between the  Corporation  and  Sterling  Financial  Services,  Inc.,  a
         Florida corporation (the "Servicing Company").

o        Increased competition in the sub-prime mobile home finance business and
         deviations  from credit  underwriting  guidelines  could  result in the
         Corporation originating Contracts with a greater risk of loss. Although
         the  Corporation  has  established   certain  guidelines  with  minimum
         acceptable  criteria for Contract  origination,  there is no limitation
         upon the number of Contracts which can deviate from these guidelines.

o        The Corporation has not had significant operations as of December 31,
         1997.

o        The  Corporation  has  experienced  negative  interest  income  and net
         operating  losses  since its  inception;  these losses are being funded
         from proceeds generated from the sale of the Notes.

o        There are limited sources of payment of interest and principal on the
         Notes.

o        The value of the Collateral will be less than the principal due on the
         Notes.

o        No public or other  market  for the  Notes  exists  and there can be no
         assurance that one may develop in the future.

o        The success of the Corporation  will, to a large extent,  depend on the
         quality of services provided by Mr. Sutter and the Servicing  Company's
         employees.  The Corporation  does not have an employment  contract with
         Mr.  Sutter and the loss of his  services  could  materially  adversely
         affect the business of the Corporation.



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<PAGE>




MOBILE HOME FINANCE INDUSTRY

      Sub-Prime Market Segment

      The  Corporation  operates  in the  sub-prime  segment of the mobile  home
finance market,  focusing on financing used homes sold to sub-prime borrowers. A
sub-prime borrower is a purchaser of a home who does not qualify for traditional
A or prime credit, which in general means that the borrower does not have all of
the following  characteristics:  (i) a long credit history and no defaults, (ii)
at his/her  current job for at least 18 months,  (iii) can easily finance a Home
through a  traditional  financial  institution,  such as a bank,  (iv) usually a
homeowner,  and (v) typical risk of loan loss is less than 3% and whose  typical
cost of credit is prime plus 1% to 3%.  Sub-prime  borrowers are generally rated
"B,"  "C"  or  "D"  based  upon  the  degree  of  variance  from  the  foregoing
characteristics.

      It has been  management's  experience  that  lenders to prime  mobile home
financing borrowers impose interest rates less than the maximum provided by law.
Management  anticipates  that almost all of its Contracts will be at the maximum
interest rate permitted by law. See "Consumer  Finance Laws and Regulations." To
the extent this interest rate differential continues,  Contracts financed in the
sub-prime market segment will have the potential for higher yields, but, because
sub-prime borrowers are not as creditworthy as prime borrowers,  these Contracts
also  present  greater risk of default and loss.  Accordingly,  the net yield on
sub-prime contracts may be less than that on prime contracts.

      Competition

      Although there is some  competition  in the mobile home finance  business,
the Corporation  believes that there are few competitors  providing financing to
sub-prime purchasers of Homes. The sub-prime market is highly fragmented and, to
date, is served by only a few non-traditional  consumer finance sources. Because
the  Corporation  provides  financing  to  borrowers  who  do  not  qualify  for
traditional  financing,  the Corporation  does not believe that it competes with
most  commercial  banks,  savings and loans,  credit  unions and other  consumer
lenders  that apply more  traditional  lending  criteria to the credit  approval
process. Historically,  these traditional sources of mobile home financing (some
of which are larger and have significantly greater financial resources) have not
served the  Corporation's  sub-prime  market segment to any significant  extent.
However,  if these and other  companies  expand their  activities  in the market
served by the Corporation, the competition for suitable Contracts in that market
will  continue  to  intensify,  which  could  have  an  adverse  effect  on  the
Corporation.

      In connection  with the  origination of Contracts,  the  Corporation  will
encounter  competition from persons or entities that may have objectives similar
in whole or in part to those of the Corporation. Most of such competitors may be
substantially better financed and have reputations and public awareness of their
operations  that are more  widely  known  and  accepted.  The  pressure  of such
competition  may  require  that  the  Corporation  pay  more  for  Contracts  it


                                       5
<PAGE>

originates or purchases,  or result in the Corporation  originating Contracts of
lesser quality, which could reduce or eliminate payments to Note Holders.

ORIGINATION AND SERVICING OF CONTRACTS

      The Corporation has entered into a Servicing  Agreement with the Servicing
Company,  to provide all services in connection  with Contract  origination  and
servicing. The agreement may be terminated by either party without cause upon 15
days' notice.  Because the Servicing  Company must operate within the guidelines
established by the Corporation, all management and operational decisions made by
the Servicing  Company will be the same as would be made if the Corporation made
such decisions  directly.  A description of the guidelines of the Corporation is
set  forth  below.  No funds of the  Corporation  are  deposited  or kept in any
account  commingled  with funds of the Servicing  Company or any other person or
entity. See "Business - Relationship with Servicing Company."

      Origination

      The  Servicing  Company will contact  borrowers as well as park owners and
Dealers to advise them of the Corporation's program for Contract origination. In
addition,  print advertising  directed at individual  borrowers may be used. The
Corporation does not anticipate that it will be dependent upon one or a few park
owners or Dealers for  identifying  potential  borrowers.  Also, the Corporation
anticipates  that park owners,  Dealers or potential  borrowers will contact the
Corporation  regarding the  availability of financing,  and the Corporation will
make a credit application available directly to the borrower.

      When the credit application from the borrower is received, an investigator
will review the application  and obtain the applicant's  credit bureau and other
information.

      Contract  origination  guidelines include the following minimum acceptable
criteria:

o        Employment history - at least six months on the job;

o        Income - depends on the amount of the loan and the debt to income ratio
         (see  below) of the borrower;

o        Time at residence - at least one year at current residence;

o        Debt to income ratio - personal debt cannot exceed 50% of the
         borrower's net income;

o        Bankruptcy  - all debts  must have been fully  discharged  at least one
         year prior to application for the loan;

o        Child  support - if the  borrower is paying child  support,  it will be
         treated as a personal  debt and factored into the debt to income ratio;


                                       6
<PAGE>

         if the borrower is receiving  child  support,  such income will only be
         considered if court mandated;

o        Repossessions  - must have  occurred  at least one year prior to
         application  for the loan;

o        Liens/judgments - will be decided on a case-by-case basis, depending on
         the type of lien or judgment, the amount involved and the age thereof;

o        Previous  delinquencies,  collections and charge-offs - will be decided
         on  a  case-by-case  basis  with  consideration  taken  for  mitigating
         circumstances,  such as divorce, disability, extended illness or layoff
         due to downsizing; and

o        Co-buyers  and  co-signers  - will  also  be  subject  to  the  minimum
         acceptable criteria set forth above.

      There are no fixed criteria pursuant to which material  deviation of these
guidelines  will be  permitted.  However,  no Contract  will be  originated to a
borrower  deviating  from these  guidelines  for which there is not an increased
down payment or a co-signer meeting the guidelines, or both. The additional down
payment  required  will  increase  with  the  increase  in  deviation  from  the
guidelines,  although  there is no fixed formula for  determining  the amount of
increased down payment required.

      Prior to the  origination  of the Contract,  the  Corporation  reviews the
financing to determine the following:  (i) all required  documentation  has been
included,  (ii) the math is correct,  (iii)  regulatory  requirements  have been
satisfied,  (iv) the amount  financed  does not exceed the maximum loan allowed,
and (v) any conditions imposed have been satisfied. The Corporation will contact
the insurance carrier to confirm insurance.

      Servicing

     Billing.  The Servicing Company generates monthly statements which are sent
to the borrower.

     Collections. The Corporation has established certain collection guidelines,
which  guidelines  will not  necessarily  be followed in all cases and which are
subject to modification at any time.

      When a delinquency  occurs,  a collector  will make a call by the eleventh
day of the delinquency.  If no response is received,  a Notice of Default Letter
will be sent to the borrower on the sixteenth  day. If the account has still not
been brought current, a collector will personally visit the delinquent borrower.
If the borrower is unable to make all required  payments on a current  basis,  a
collector may make reasonable payment  arrangements to cure the delinquency.  If
all of these collection  processes are not successful,  the repossession process
commences immediately.

     Repossessions and Resale Department. Either the borrower voluntarily agrees
to vacate the Home, or an attorney is contacted by the  Corporation to effect an
involuntary


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<PAGE>

repossession.  All costs  associated with the  repossession are an obligation of
the borrower. To effect an involuntary repossession, in general, the borrower is
first  given  written  notice  of  intent  to  repossess,  and a period of time,
generally five days, to cure all defaults.  If the defaults are not cured within
said time  period,  a  complaint  is filed and a  judgment  obtained.  After the
judgment  is  obtained,  a writ of  possession  is  obtained  and  given  to the
appropriate law enforcement agencies,  who evict the borrower from the Home. The
Home will be renovated as necessary  and sold in its then current  location,  if
possible, or moved to a Dealer's lot or another Park for resale.

      Laws limiting or prohibiting deficiency judgments, Federal bankruptcy laws
and numerous  other related  federal and state laws may interfere with or affect
the  ability  of a secured  party to  repossess  Collateral  and/or to enforce a
deficiency  judgment.  For example, in a Chapter 13 proceeding under the Federal
Bankruptcy  Code, a court may prevent a lender from  repossessing a mobile home,
and,  as part of the  rehabilitation  plan,  reduce  the  amount of the  secured
indebtedness to the market value of the Home at the time of bankruptcy,  leaving
the  lender  as  a  general   unsecured   creditor  for  the  remainder  of  the
indebtedness.  A bankruptcy court may also reduce the monthly payments due under
a  Contract  or  change  the  rate of  interest  and  time of  repayment  of the
indebtedness.  This may limit the Corporation's ability to receive full payments
on a Contract or recovery in the event of a default under a Contract,  which may
decrease funds available to make payments on the Notes.

SALE OF CONTRACTS

      The  Corporation may from time to time sell blocks of Contracts (the "Sale
Contracts")  which it  originates to other  lenders.  The  Corporation  does not
anticipate  selling such  Contracts  until at least twelve (12) months after the
origination  date.  No such  sales  have  occurred  as of the date of this  Form
10-KSB.

FLOOR PLAN FINANCING

      The Corporation provides financing to Dealers for Homes held for resale to
Home purchasers,  called floor plan financing.  The Corporation anticipates that
the financing  will be at effective  interest rates ranging from 14% to 24% (the
A.P.R. may be less, but the effective rate includes additional interest payments
in the form of points or similar charges  allowed by law).  Advances under floor
plan  arrangements are secured by the mobile home purchased with the proceeds of
the  borrowing and generally are due on the earlier of the date the inventory is
sold or six months from the inception of the advance.

OTHER BUSINESS SEGMENTS

      The Corporation may also: (1) purchase, refurbish (if necessary) and lease
or sell new or used Homes;  (2) buy and improve land for development of Parks or
provide  financing to others for such purpose;  (3) buy and sell Parks;  and (4)
purchase  other  sub-prime  financial  companies  in  the  mobile  home  lending
business. In connection therewith,  the Corporation has purchased a 25% interest
in a  mobile  home  park in  Hillsborough  County,  Florida  (the  Corporation's


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<PAGE>

majority  stockholder  and President  owns the  remaining  75% of the Park).  In
addition, the Corporation has purchased significant new home inventories,  which
they are selling  substantially at this Park. Finally,  the Corporation owns and
rents Homes  located in the Halliday  Village  Mobile Home Park (which is wholly
owned by the Corporation's majority stockholder and President).  The Corporation
anticipates  that it may  continue  to engage in such  activities  if it becomes
aware of favorable opportunities.

MARKETING

      The  Corporation  anticipates  that it will  not  have  to  engage  in any
significant  marketing activities because of the anticipated high demand for the
financing it provides and the lack of  significant  competition  to provide such
financing.  However,  the  Corporation  intends  to contact  Dealers  throughout
Florida  to  advise  them  of the  availability  of the  Corporations  financing
program.

MARKET AREA

      There  are a large  number  of Home  purchases  in  Florida  and  there is
significant  wealth in Florida because of the nature and size of the population.
The Corporation  believes that Florida currently benefits from a strong economy.
According  to the Florida  Chamber of  Commerce,  Florida is the fourth  largest
consumer market in the U.S. In 1993, Florida's population was over 13.4 million,
with  approximately  70% of new  arrivals in the 18 to 44 age  bracket.  Florida
emerged as a major economic  force in the U.S. in the 1980's.  By the end of the
decade,  Florida had become the nation's  leader in major new plant locations or
expansions. Florida consistently ranks as one of the top locations for industry.
Florida  has  consistently  been a  pacesetter  in new  business  incorporation,
leading the nation a number of recent  years.  Florida  has three  cities in the
nation's top twelve metropolitan statistical areas in terms of percentage growth
in the number of new. The state has the largest number of  manufacturing  plants
in the Southeast.  Numerous  economists  predict  moderate but continued  steady
growth in Florida's economy.

      However,  because  the  Corporation  intends  to limit its  operations  to
Florida,  the Corporation's  operations could be unfavorably impacted by adverse
changes in the economic  environment in Florida which could adversely affect the
creditworthiness  of the  Corporation's  prospective  borrowers in the sub-prime
market in Florida.  Although the  Corporation  believes  Florida's  economy will
continue to grow, there can be no assurance that this is the case. The resulting
lack of diversity in the geographic area in which the  Corporation  operates may
increase  the  risk of loss to the  Corporation  and the  Note  Holders  because
adverse economic  conditions which may occur in Florida but not elsewhere in the
country will have a greater adverse affect on the  Corporation's  operations and
thus its ability to make payments on the Notes than if the Corporation  operated
in a broader geographic area.



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<PAGE>


CHANGES IN PROGRAMS, PRODUCTS, POLICIES AND PROCEDURES

      Factors such as increased  competition  in the industry and other industry
trends described above, as well as other reasons, may cause the Corporation from
time to time to review and change its financing programs,  products and services
offered,  and other business  policies and  procedures.  To the extent there are
future changes in these areas,  the  Corporation  may originate  Contracts or be
subject  to other  circumstances  which  may  increase  the risk of loss to Note
Holders.  The Corporation will  continually  review these areas and reserves the
right to change any criteria related thereto described herein or otherwise as it
deems appropriate.

CONSUMER FINANCE LAWS AND REGULATIONS

      The   Corporation's   business   activities,   particularly   its  Finance
Activities,  are subject to  regulation  and licensing  under  various  Federal,
Florida and local consumer finance statutes,  regulations and ordinances.  These
laws,  rules and  regulations:  (i) govern the way the  Corporation can operate;
(ii)  limit the  interest  rate and other  charges  that may be  imposed  by, or
prescribe certain other terms of, the Contracts that the Corporation originates;
and (iii) define the Corporation's  rights to repossess and sell Collateral.  If
the  Corporation  fails to comply with these laws and  regulations,  it could be
required to cease operations or be subject to fines and penalties, and borrowers
under the  Contracts  could have civil  remedies  against  the  Corporation  and
defenses  under the  Contracts  which could  adversely  affect the  Corporations
ability to enforce its rights and collect payment of sums due thereunder, all of
which  could  eliminate  or reduce the  Corporation's  cash flow and thereby its
ability to make  payments  on the  Notes.  There is no  assurance  that laws and
regulations   under  which  the  Corporation   operates  will  not  become  more
restrictive,  which  could  reduce the  Corporation's  cash flow and thereby its
ability to make payments on the Notes.

RELATIONSHIP WITH SERVICING COMPANY

      Servicing Agreement

      The Corporation has entered into a Servicing  Agreement with the Servicing
Company,  to provide all services in  connection  with Contact  origination  and
servicing.  The Servicing Agreement is for an initial term commencing January 1,
1997  through  June 30,  2002,  after  which date it may be extended at the sole
discretion  of the  Corporation  upon  such  terms and  conditions  and for such
periods as mutually agreed between the  Corporation  and the Servicing  Company.
Either party may terminate the Servicing  Agreement for any reason upon 15 days'
advance notice.

      Because  the  Servicing   Company  must  operate   within  the  guidelines
established by the Corporation, all management and operational decisions made by
the Servicing  Company will be the same as would be made if the Corporation made
such decisions  directly.  No funds of the  Corporation are deposited or kept in
any account  commingled with funds of the Servicing  Company or any other person
or entity.

      The  Corporation  will pay the  Servicing  Company an amount  equal to all
expenses of the Servicing  Company computed on an accrual basis ("Actual Costs")


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<PAGE>

plus twenty percent (20%) of Actual Costs for services rendered,  except that if
the  Servicing  Company  provides  similar  services  to  other  entities,   the
Corporation  will pay the  Servicing  Company:  (i) for any  out-of-pocket  cash
expenditures,  such as  attorneys'  fees and court costs  incurred in connection
with  origination  and  servicing of the  Corporation's  Contracts  (the "Direct
Expenses"),  and (ii) for their  pro-rata  amount of Actual  Costs  less  Direct
Expenses  - with such  pro-ration  based  upon the ratio of the total  number of
Contracts  held by each  entity to the total  number  of  Contracts  held by all
entities.

      It was anticipated  that the  Corporation  would loan up to $75,000 to the
Servicing  Company  for the  purchase  and/or  lease  of  office  space,  office
equipment, trucks and automobiles, however to date this transaction has not been
consummated. In the event such a transaction occurs, the Corporation anticipates
that it will repay any advanced funds in equal monthly installments of principal
and interest at the rate of 10.5% per annum,  with the final payment due on June
30, 2002.

      Reason for Using the Servicing Company

      A separate servicing company was formed for administrative convenience. It
is  anticipated  that  additional  employees  will  need to be hired to  perform
servicing functions for the Corporation. In addition, if affiliated entities are
formed, the same employees  performing  servicing  functions for the Corporation
would perform similar  servicing  functions for such entities.  If there were no
separate servicing  company,  such employees would be considered to be employees
of the Corporation and the affiliated entities, requiring separate paychecks and
related income tax filings and deposits to be made by each separate entity.

      Conflicts of Interest

      Anthony A. Sutter,  the sole officer and director of the  Corporation  and
the  Servicing  Company,  may engage for his own account,  or for the account of
others,  including the affiliated entities, in other business ventures,  some of
which may have the same investment objectives as the Corporation,  and therefore
compete with the Corporation.

      To the extent the Corporation  competes with other  businesses,  including
affiliated  entities,  competition for  origination of suitable  Contracts would
intensify,  which could have an adverse  effect on the  Corporation  because the
Corporation  may originate  Contracts  with a greater risk of loss,  which could
adversely  affect  the Note  Holders by  reducing  the funds  available  to make
payments on the Notes and the value of the Collateral.

      This competition for origination of Contracts creates a potential conflict
of interest  because it is  anticipated  that the  Servicing  Company,  which is
responsible for originating Contracts, will provide similar origination services
to any  affiliated  entities  formed by Mr. Sutter or his  affiliates  which are
engaged in businesses similar to that of the Corporation. An additional conflict
of interest with respect  thereto exists because the  Corporation  and Servicing
Company are both managed by Mr. Sutter. Accordingly,  there is no assurance that
decisions  concerning Contract  origination and other matters will be made which


                                       11
<PAGE>

more favorably impact the Corporation than the affiliated  entities,  increasing
the risk of default on the Notes.

      In order to minimize the foregoing conflicts of interest,  the Corporation
and the Servicing  Company have agreed that if the  Corporation  and  affiliated
entities both have funds available for Contract  origination,  Contracts will be
originated on an alternating basis, meaning first the Corporation will originate
a Contract, then the affiliated entities will originate a Contract (or Contracts
if there is more than one  affiliated  entity  with funds  available),  then the
Corporation will originate a Contract, and so on.

EMPLOYEE

     As  of  December  31,  1997,  there  was  only  one  (1)  employee  of  the
Corporation,  Mr. Sutter. Management of the Corporation and the employee are the
same  individual.  Mr.  Sutter is not  represented  by a  collective  bargaining
agreement  nor is he bound  by an  employment  agreement  (see  Business  - Risk
Factors).

ITEM 2 - PROPERTIES

      The  Corporation's  executive  offices are located at 12408 North  Florida
Avenue, Tampa, Florida. Pursuant to an oral agreement, the office is leased from
Halliday  Village  Mobile  Home  Park,  Inc.,  an  entity  wholly  owned  by the
Corporation's  majority stockholder and President,  on a month-to-month basis at
$2,200 per month.

ITEM 3 - LEGAL PROCEEDINGS

      NONE

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

      NONE

                                             PART II.

ITEM 5 - MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      NONE



                                       12
<PAGE>


ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

OVERVIEW:

The Corporation,  which was incorporated in January 1997, and began operating in
April,  1997  is  considered  to be in the  development  stage,  as  defined  in
Financial  Accounting  Standards Board  Statement No. 7. The Corporation  offers
financial services to the mobile home industry by originating, purchasing and/or
refinancing sub-prime mobile home installment contracts,  providing dealer floor
plan financing and renting mobile homes.

RESULTS OF OPERATIONS:

The Corporation  generated revenues of $25,449 during the period January 3, 1997
(date of  inception)  to  December  31,  1997.  Approximately  $12,300  of these
revenues  resulted  from  interest  earned  on  finance   receivables  and  cash
equivalents.  The  remaining  revenues of  approximately  $13,000  consisted  of
revenues from the rental of mobile homes and various fees charged to Dealers and
Borrowers.  The Corporation  incurred  operating expenses of $176,986 during its
initial period of operations.  This amount consisted substantially of management
fees of $62,368  paid under the  aforementioned  Servicing  Agreement,  interest
expense of $71,622 incurred on the Notes and office and lot rent of $33,450 paid
to Halliday Mobile Home Park, Inc. In addition, depreciation expense amounted to
$6,097 for the period January 3, 1997 to December 31, 1997. The net loss for the
period  January 3, 1997 to December  was  $151,537.  The losses  result from the
initial  start-up costs incurred to implement the  Corporation's  business plan,
and because  there is normally a lag time  between the receipt of proceeds  from
the  Notes  and  investment  of  such  funds  in  receivables  (the  cost of the
indebtedness is significantly higher that the return on cash equivalents).

LIQUIDITY AND CAPITAL RESOURCES:

Operating  activities  used  $126,174 of cash flow during the period  January 3,
1997 (date of  inception) to December 31, 1997.  The cash was used  primarily to
fund the net  loss for the  period  January  3,  1997 to  December  31,  1997 of
$151,537,   as  adjusted  for  non-cash   expenses  such  as  depreciation   and
amortization  of deferred debt issuance costs  totaling  $29,213,and to purchase
mobile home inventory of $12,000.  Cash used in operating  activities was offset
by an increase in accrued expenses of $8,1505.

The Corporation's  investing  activities used $461,871 of cash during the period
January 3, 1997 (date of inception) to December 31, 1997.  These funds were used
to purchase  property and  equipment for $179,328  (consisting  of furniture and
equipment  of $21,372  and mobile  homes  held for rental of  $157,956),  and to
originate   floor  plan  and  finance   receivables  of  $86,040  and  $196,503,
respectively).  At December 31, 1997, finance receivables had terms of 60 to 120
months  and  interest  rates  ranging  from 13% to  17.9%.  The  Corporation  is
attempting to limit its exposure to interest  rate spread by investing  funds in
finance  installment  contracts as Notes are sold since the cost of the funds is
significantly higher than the yield on cash and cash equivalents.

                                       13
<PAGE>

Financing activities generated cash flow of $1,404,478 during the period January
3, 1997 (date of inception) to December 31, 1997. This amount was generated from
the sale of the Notes  (which  resulted in net cash  proceeds  of  approximately
$1,416,028 after consideration of the payment of deferred debt issuance costs).

The net impact of the above  operating,  investing and financing  activities was
that cash and cash  equivalents  increased by $816,433 during the  Corporation's
first period of operations.

The  Corporation is offering  subscriptions  for a maximum of 9,900 Notes in the
principal  amount of  $1,000  each.  The Notes  bear  simple  interest  at 10.5%
(interest  payable monthly) and are payable in full on June 30, 2002. The Notes,
which are secured by the  Collateral,  may be prepaid in whole or in part at any
time without premium or penalty. The Corporation has sold $1,612,000 of Notes as
of December 31, 1997, and through the date of this Form 10-KSB has  subsequently
sold an additional  $6,780,000 of such Notes.  Accordingly,  the Corporation may
sell an additional  $1,508,000 of Notes through June 30, 1999 (the date on which
the offering of such Notes will be terminated). If the Corporation is successful
in selling the  remaining  Notes of  $1,508,000,  they will generate net cash of
approximately  $1,357,000  ($1,508,000 less debt issuance costs of approximately
$151,000).

The Corporation  believes that it will be able to satisfy its cash  requirements
for the  foreseeable  future if it does not expand its  business by  originating
additional finance receivable  contracts.  However, in order for the Corporation
to  continue  to expand  its Dealer  base and  portfolio  of finance  receivable
contracts, and to ultimately pay the Notes in full, the Corporation will have to
generate cash from operations and/or secure  additional  capital resources (e.g.
other debt or equity).  No assurance  can be given that such  capital  resources
will be available or available on reasonable terms.

Impact of Inflation and Changing Prices

    Although  the  Corporation  does not believe that  inflation  directly has a
material  adverse  affect on its financial  condition or results of  operations,
increases in the inflation rate generally are associated with increased interest
rates.  Because the  Corporation's  current  debt is at a fixed rate and in most
cases the Corporation  purchases finance contracts bearing a fixed rate equal to
the maximum  interest rate permitted by law,  increased  costs of borrowed funds
will  likely  not  have  a  material   adverse   impact  on  the   Corporation's
profitability,  however,  they  could  have a  material  adverse  impact  on the
Corporation's  ability to expand.  Inflation  could  also  adversely  affect the
Corporation's operating expenses.






                                       14
<PAGE>



ITEM 7 - FINANCIAL STATEMENTS

                       STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
                        (A Development Stage Enterprise)


                                TABLE OF CONTENTS


--------------------------------------------------------------------------------


                                                      Page

Independent Auditors' Report                           16

Financial  Statements  as of and  for  the  period  January  3,  1997  (date  of
   inception) to December 31, 1997:

      Balance Sheet                                    17
      Statement of Operations                          18
      Statement of Stockholders' Deficit               19
      Statement of Cash Flows                          20
      Notes to Financial Statements                    21 - 26




                                       15
<PAGE>

                [Letterhead of Beard, Nertney, Kingery, Crouse & Hohl, P.A.]




INDEPENDENT AUDITORS' REPORT

To the Stockholders of Sterling Financial Services of Florida I, Inc.:

We have audited the accompanying balance sheet of Sterling Financial Services of
Florida I, Inc. (the "Company"), a development stage enterprise,  as of December
31, 1997, and the related  statements of operations,  stockholders'  deficit and
cash flows for the period  January 3, 1997 (date of  inception)  to December 31,
1997.  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 audit.

We conducted our audit 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 audit provides 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 the Company as of December 31,
1997, and the results of its operations and cash flows for the period January 3,
1997 (date of  inception)  to December  31, 1997 in  conformity  with  generally
accepted accounting principles.

                  Beard, Nertney, Kingery, Crouse & Hohl, P.A.


September 11, 1998
Tampa, FL



                                       16
<PAGE>


                       STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
                        (A Development Stage Enterprise)

                               BALANCE SHEET AS OF
                                DECEMBER 31, 1997

------------------------------------------------------------------------


ASSETS

Cash and cash equivalents                                    $  816,433
                                                             -----------

Receivables:
Finance                                                         196,503
Mobile home floor plan                                           86,040
Affiliate                                                        12,550
                                                             -----------
   Total receivables                                            295,093
                                                             -----------

Inventories                                                      12,000

Property and equipment - net                                    173,231

Deferred debt issuance costs, net                               172,856
                                                             -----------

TOTAL                                                        $1,469,613
                                                             ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES:
Secured notes payable                                        $1,612,000
Accrued and other liabilities                                     8,150
                                                             -----------
   Total liabilities                                          1,620,150
                                                             -----------

STOCKHOLDERS' DEFICIT:
Common stock, no par value, 10,000 shares
  Authorized; 1,000 shares issued and                             1,000
outstanding
Deficit accumulated during the development                    (151,537)
stage
                                                             -----------
   Total stockholders' deficit                                (150,537)
                                                             -----------

TOTAL                                                        $1,469,613
                                                             ===========

------------------------------------------------------------------------

See notes to financial statements.


                                       17
<PAGE>


                       STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
                        (A Development Stage Enterprise)

                             STATEMENT OF OPERATIONS
                     FOR THE PERIOD JANUARY 3, 1997 (DATE OF INCEPTION)
                              TO DECEMBER 31, 1997

   ---------------------------------------------------------------------

   REVENUES:
   Interest:
     Receivables                                              $   4,473
     Cash and cash equivalents                                    7,836
   Rental income                                                  6,260
   Floor plan                                                     3,630
   Appraisal fees                                                 3,250
                                                              ----------
      Total revenues                                             25,449
                                                              ----------

   OPERATING EXPENSES:
   Management fees-related party                                 62,368
   Interest                                                      71,622
   Office rent-related party                                     17,600
   Lot rent-related party                                        15,850
   Depreciation                                                   6,097
   Other                                                          3,449
                                                              ----------
      Total operating expenses                                  176,986
                                                              ----------

   NET LOSS                                                   $(151,537)
                                                              ==========

   LOSS PER COMMON SHARE                                      $   (152)
                                                              ==========

   ---------------------------------------------------------------------

   See notes to financial statements.






                                       18
<PAGE>

                       STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
                        (A Development Stage Enterprise)

                       STATEMENT OF STOCKHOLDERS' DEFICIT
                     FOR THE PERIOD JANUARY 3, 1997 (DATE OF INCEPTION)
                              TO DECEMBER 31, 1997
-------------------------------------------------------------------------------



                                                 Deficit
                                               Accumulated
                                               During the
                             Common Stock      Development
                         ----------------------
                          Shares    Amount        Stage          Total
                         ---------- -----------------------   ------------

Balances at January 3,
   1997 (inception)          0      $   0       $   0          $   0

Issuance of
   Common stock            1,000
                                      1,000         0            1,000

Net loss
                                                (151,537)      (151,537)
                         ---------- -----------------------   ------------
Balances at
   December 31, 1997       1,000    $ 1,000    $(151,537)     $(150,537)
                         ========== =======================   ============

--------------------------------------------------------------------------

See notes to financial statements.



                                       19
<PAGE>


                       STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
                        (A Development Stage Enterprise)

                             STATEMENT OF CASH FLOWS
                     FOR THE PERIOD JANUARY 3, 1997 (DATE OF INCEPTION)
                              TO DECEMBER 31, 1997
--------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                   $ (151,537)
Adjustments  to reconcile  net loss to net cash used by
   operating activities:
      Depreciation                                                  6,097
      Amortization and write off of deferred debt
         issuance costs                                            23,116
      Increase in inventories                                    (12,000)
      Increase in accrued and other liabilities                     8,150
                                                              ------------

NET CASH USED BY OPERATING ACTIVITIES                           (126,174)
                                                              ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment                          (179,328)
   Finance receivables originated, net of payments and
       discounts                                                (196,503)
   Floor plan receivables, net of payments and discounts         (86,040)
                                                              ------------

CASH  USED BY INVESTING ACTIVITIES                              (461,871)
                                                              ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of common stock                           1,000
   Proceeds from issuance of secured notes payable              1,612,000
   Increase in affiliate receivables                             (12,550)
   Cash paid for deferred debt issuance costs                   (195,972)
                                                              ------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                       1,404,478
                                                              ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                         816,433

CASH AND CASH EQUIVALENTS, BEGINNING
   OF PERIOD                                                            0
                                                              ------------

CASH AND CASH EQUIVALENTS, END
   OF PERIOD                                                   $  816,433
                                                              ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION-Interest paid                                   $   48,506
                                                              ============

--------------------------------------------------------------------------

See notes to financial statements.

                                       20
<PAGE>


                       STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS
                     FOR THE PERIOD JANUARY 3, 1997 (DATE OF INCEPTION)
-------------------------------------------------------------------------------
                              TO DECEMBER 31, 1997



NOTE A - FORMATION AND OPERATIONS OF THE COMPANY

Sterling  Financial  Services  of  Florida  I, Inc.  (the  "Company")  which was
incorporated  under the laws of the state of Florida  on  January  3,  1997,  is
considered  to be in the  development  stage as defined in Financial  Accounting
Standards  Board Statement No.7. The Company's  finance  receivables  consist of
retail installment sales contracts and dealer floor plans  collateralized by new
and used mobile  homes  subject to credit  approval.  The Company  also owns and
rents mobile homes  located in the Halliday  Village  Mobile Home Park in Tampa,
Florida.   The  Company's   operations   are  located  in  Tampa,   Florida  and
substantially all of their customers are residents of Florida.


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The Company's  financial  statements  are prepared  using the accrual  method of
accounting.

Revenue Recognition

Interest income is recognized using the interest  (actuarial)  method.  Unearned
finance  charges are rebated to  customers  under the Rule of 78's  method.  The
difference between income previously  recognized under the interest  (actuarial)
method and the rule of 78's method is  recognized  as an  adjustment to interest
income  at the  time of the  rebate.  Accrual  of  interest  income  on  finance
receivables is generally  suspended when no payment has been received for ninety
days;  the  accrual of income is not  resumed  until  management  believes  such
interest is collectible.

Nonrefundable Acquisition Discounts and Allowance for Credit Losses

The Company enters into  agreements  with dealers that  establish  nonrefundable
acquisition  discounts to protect the Company from potential  losses  associated
with  such  contracts.  All or a  portion  of  these  negotiated  discounts  are
available  to  absorb  credit  losses.   Management  attempts  to  maintain  the
nonrefundable discount at a level consistent with anticipated loan charge offs.

The  allowance  for credit  losses is  established  through a charge to earnings
based on management's  evaluation of potential losses inherent in the portfolio.
Such   evaluation   includes  a  review  of  all  such  assets  for  which  full
recoverability may not be reasonably assured.  At December 31, 1997,  management
believes no allowance for credit losses is necessary.

                                       21
<PAGE>

Credit loss experience,  contractual delinquency of loan receivables,  the value
of underlying  collateral and current economic conditions are factors management
uses in  negotiating  the discounts  and  assessing the overall  adequacy of the
discounts to absorb losse

The Company generally initiates repossession proceedings when an account is more
than two  payments  contractually  past due,  but the  repossession  process  is
accelerated for loans which become delinquent in the first or second payment.

Use of Estimates

The preparation of financial  statements in accordance  with generally  accepted
accounting  principles  requires  that  management  make certain  estimates  and
assumptions  that affect the reported  amounts of assets and liabilities and the
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements.  The reported  amounts of revenues and expenses during the reporting
period may be affected by the estimates and  assumptions  management is required
to make. Actual results could differ from those estimates. Significant estimates
have been made by management with respect to the allowance for credit losses. It
is at least  reasonably  possible that certain of the Company's  estimates  will
change in the near term with respect to this matter.

Financial Instruments

The  Company  believes  the book value of their cash and cash  equivalents,  and
accrued  and other  liabilities  approximates  their  fair  values  due to their
short-term  nature.  Management  also  believes the book value of the  Company's
secured  notes  payable  and  finance  and mobile  home  floor plan  receivables
approximates  their  fair  values as the  current  interest  rates on such items
approximate  rates at which similar types of borrowing and lending  arrangements
could be currently negotiated by the Company.

Property and Equipment

Property and equipment  are stated at cost.  Major  additions  are  capitalized,
while minor additions and maintenance and repairs which do not extend the useful
life of an asset are expensed as  incurred.  Depreciation  is computed  using an
accelerated method over the assets' estimated useful lives of 5 to 27.5 years.

Inventories

Inventories are valued at the lower of cost or market and consist of mobile home
inventories.

Income Taxes

The Company has elected to be taxed under  Subchapter S of the Internal  Revenue
Code,  and  accordingly,  is not  subject  to  income  taxes as the  results  of
operations  flow through to the  stockholders,  for inclusion in their  personal
income tax returns.

                                       22
<PAGE>


Deferred Debt Issuance Costs

Direct  costs  incurred to  register  and issue the  secured  notes  payable are
deferred and amortized to interest expense over the lives of the loans using the
interest  method.  From  time to time  the  Company  evaluates  this  asset  for
impairment.   In  connection  with  such  evaluation,   the  Company  wrote  off
approximately  $8,693 of such costs at December 31,  1997;  such amount has been
included in interest expense in the accompanying statement of operations.

Loss per Common Share

Loss per  common  share is based on the  weighted  average  number of common and
common equivalent shares  outstanding  during each period.  The weighted average
number of common shares  outstanding  during the period January 3, 1997 (date of
inception) to December 31, 1997 was 1,000.

Statement of Cash Flows

For purposes of the  statement of cash flows,  the Company  considers all highly
liquid  investments  purchased with an original maturity of three months or less
to be cash equivalents.

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of
credit risk consist primarily of receivables and cash.  Management believes risk
with respect to such receivables is mitigated because they are collateralized by
/mobile homes purchased by the Company's customers.

With respect to cash  balances,  the Company  maintains all of its cash and cash
equivalents at one FDIC insured  institution which has a maximum insurance limit
of  $100,000.  At December 31,  1997,  the  Company's  uninsured  cash  balances
approximated $745,000.


NOTE C - PROPERTY AND EQUIPMENT-NET

Property and equipment consists of the following:

    Rental mobile homes                               $157,956
    Furniture, fixtures and office equipment            21,372
    Less accumulated depreciation                      (6,097)
                                                    -----------

    Property and equipment - net                      $173,231


                                       23
<PAGE>


NOTE D - FINANCE RECEIVABLES - NET

Finance receivables consist of the following:

    Finance receivables, gross                        $426,121
    Less unearned finance charges                    (210,487)
                                                     ---------
    Finance receivables, principal                     215,634
    Less non-refundable discounts                   (  19,131)
                                                    ----------

    Finance receivables, net                         $196,503

Finance receivables  generally have terms of 60 to 120 months with rates ranging
from 13 % to 17.9 %. At December 31, 1997 no interest  income has been suspended
on finance receivables.

Principal  collections  on finance  receivables  totaled  $14,165 for the period
ended  December  31,  1997.  These  collections  represented  6% of the  average
outstanding principal balances for 1997.  Contractual  maturities of the finance
receivables by year are as follows:

            Years Ending
            December 31,                                Amounts

            1998                                     $   60,119
            1999                                         49,569
            2000                                         49,569
            2001                                         49,569
            2002                                         48,734
            Thereafter                                  168,561

            Total                                      $426,121

Changes in the  allowance for credit  losses and the  nonrefundable  acquisition
discount  during the period  January 3, 1997 (date of inception) to December 31,
1997, were as follows:

Allowance for credit losses:

      Beginning balance                                    $0
      Provision for credit losses                           0
      Finance receivables charged off                      (0)
                                                          ---

      Ending balance                                       $0



                                       24
<PAGE>



Nonrefundable acquisition discount:

      Beginning balance                                $       0
      Discounts acquired                                  19,131
      Discounts accreted to income                             0
      Finance receivables charged off                          0
                                                     -----------

      Ending balance                                     $19,131


NOTE E - SECURED NOTES PAYABLE

Secured notes payable bear interest at 10.5%, with interest payable monthly, and
mature  on  June  30,  2002.  The  notes  are  secured  by a  first  lien on the
installment  sales  contracts.  The secured notes are  prepayable in whole or in
part at any time without  premium or penalty.  The Company has  registered  $9.9
million of such notes and is  continuing  to offer the  remaining  $8,288,000 of
secured notes for sale. The notes are being offered on a "best-efforts" basis by
broker-dealers  who  are  members  of the  National  Association  of  Securities
Dealers, Inc.


NOTE F - RELATED PARTY TRANSACTIONS

In 1997, the Company's majority  stockholder  advanced $30,350 to the Company of
which $28,600 was repaid;  the remaining $1,750 is included in accrued and other
liabilities  in the  accompanying  balance  sheet.  The advances  were, and are,
unsecured, non-interest bearing and due on demand.

The Company is managed by Sterling Financial Services,  ("SFS"), a related party
by virtue of common ownership. Management fees paid to SFS, including direct and
indirect  charges  allocated to the Company,  during the period  January 3, 1997
(date of inception) to December 31, 1997 were $62,368.

The Company rents  certain  office space and lot space for its rental units from
Halliday  Village  M.H.P.  ("Halliday"),  a  related  party by  virtue of common
ownership. These lot spaces are rented on a month to month basis and no contract
or lease has been signed.  During the period January 3, 1997 (date of inception)
to  December  31,  1997,  the  Company  paid  office and lot rent of $17,600 and
$15,850, respectively, to Halliday.


NOTE G - PROFORMA NET LOSS AS IF THE COMPANY WAS A "C"
                   CORPORATION

If the Company was a "C"  corporation it would be required to record a provision
or benefit for income taxes. The following information presents the proforma net
loss as if the Company was a


                                       25
<PAGE>


"C"  corporation.   The  presentation  used  is  in  accordance  with  Financial
Accounting Standard Statement No. 109, "Accounting for Income Taxes".

      Loss before income taxes                         ($151,537)

      Income tax expense (benefit)                            (0)
                                                       ----------
      Net Loss                                         ($151,537)
                                                       ==========

No benefit for income taxes has been recorded because the  realizability of such
benefit,  and the related  deferred income tax asset,  did not meet the required
recognition standards established by SFAS 109.

--------------------------------------------------------------------------------


                                       26
<PAGE>

ITEM 8 -  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
FINANCIAL DISCLOSURES

      NONE

                                    PART III.

ITEM  9  -  DIRECTORS,   EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

      Set forth  below is  certain  information  as of  December  31,  1997 with
respect to any persons known to the  Corporation to be the  beneficial  owner of
more than 5% of the Corporation's  Common Stock and of the Common Stock owned by
the sole officer and director of the Corporation.

                                                  Amount and
                                                   Nature of
                                                  Beneficial
 Name of Beneficial Owner    Title of Class        Ownership       % of Class

Anthony A. Sutter                Common                  800              80%

Judith   Estrin,   Trustee;      Common                  200              20%
Stanley D. Estrin                                        ---              ---
Irrevocable Trust dated
3/16/93

All officers and  directors                              800              80%
                                                         ===              ===
as a group (1 person)
----------------------------

      Anthony  A.  Sutter,  age 48,  has been  the  President,  Chief  Executive
Officer,  Secretary,  Treasurer  and Sole  Director of the  Corporation  and the
Servicing  Company since their inception.  He has also been the sole officer and
director of Sterling  Properties  Management,  Inc., a Tampa,  Florida  property
management  company,  since  October.  1989.  He is also  the sole  officer  and
director  of four  Florida  corporations  owning  mobile  home parks in Florida,
Halliday Village Mobile Home Park, Inc., Oak Bend Mobile Home Park, Inc., Hidden
Oaks Mobile Home Park,  Inc., and Regency Oaks Mobile Home Park, Inc., and has a
75% interest in Parkwood  Mobile Home Park,  L.C. (in which the  Corporation has
purchased a 25% interest). He received a B.S. degree in Accounting and Economics
from St. Louis University,  St. Louis, Missouri in 1973. He has been involved in
the residential  housing business for 26 years,  during which time he has owned,
managed and operated many properties, including mobile home parks.

      The  Corporation  does not have a written  employment  agreement  with Mr.
Sutter.  All  compensation  paid to Mr.  Sutter  will  be paid by the  Servicing
Company,  based upon available funds, with no other limitation.  No compensation
has been paid to Mr. Sutter since the Corporation's inception.




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<PAGE>

ITEM 10 - EXECUTIVE COMPENSATION

      Name               Position                         Compensation

      Anthony A. Sutter  President, Chief Executive           NONE
                         Officer, Secretary, Treasurer
                         and Sole Director



      The Corporation  does not directly pay salaries to Management.  Management
would receive  salaries  from the Servicing  Company,  which  salaries  would be
allocated between the Corporation and Affiliated  Corporations.  See "Business -
Relationship with Servicing Company - Servicing  Agreement." Mr. Sutter receives
no salary from the Corporation, and accordingly no officer, director or employee
of the Corporation  receives  compensation  attributable to services rendered to
the Corporation in excess of $100,000 per year.


ITEM 11 -  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      Set forth  below is  certain  information  as of  December  31,  1997 with
respect to any persons known to the  Corporation to be the  beneficial  owner of
more than 5% of the Corporation's  Common Stock and of the Common Stock owned by
the sole officer and director of the Corporation.

                                                  Amount and
                                                   Nature of
                                                  Beneficial
 Name of Beneficial Owner    Title of Class        Ownership       % of Class

Anthony A. Sutter                Common                  800              80%

Judith   Estrin,   Trustee;      Common                  200              20%
Stanley D. Estrin                                        ---              ---
Irrevocable   Trust   dated
3/16/93

All officers and  directors                              800              80%
                                                         ===              ===
as a group (1 person)

---------------------------




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<PAGE>


ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Mr. Sutter is President, Chief Executive Officer, Secretary,  Treasurer and
Sole Director of both the Corporation and the Servicing Company. Mr. Sutter owns
the controlling interest in both the Corporation and the Servicing Company.

      The Corporation  may sell or lease homes to affiliates.  Any lease will be
at fair market value,  based upon the  Corporation's  lease rates to independent
third  parties,  and any sale will be at fair market value based upon  wholesale
value published by the National Automobile Dealers Association.

      Pursuant to the Servicing  Agreement,  the  Servicing  Company will act as
agent for the Corporation.  From inception to December 31, 1997, the Corporation
has paid $62,368 to the Servicing Company under the terms of the agreement.  For
a  description  of the Agency  Agreement,  see  "Business  -  Relationship  with
Servicing Company - Servicing Agreement."

      The  Corporation  may loan up to $75,000 to the Servicing  Company for the
purchase and/or lease of office space, office equipment, trucks and automobiles.
The  Servicing   Company  will  repay  any  advanced   funds  in  equal  monthly
installments of principal and interest at the rate of 10.5% per annum,  with the
final payment due on June 30, 2002. See "Business - Relationship  with Servicing
Company - Servicing Agreement."

      The  Corporation's  executive  offices are located at 12408 North  Florida
Avenue, Tampa, Florida. Pursuant to an oral agreement, the office is leased from
Halliday  Village Mobile Home Park,  Inc., an entity wholly owned by Mr. Sutter,
on a month-to-month  basis for $2,200 per month . The Corporaton also leases lot
space for its rental units from Halliday. These lot spaces are rented on a month
to month  basis and no  contract  or lease has been  signed.  During  1997,  the
Corporation paid $17,600 in office rent and $15,850 in lot rents.

      The  Corporation  periodically  advances  funds to Mr. Sutter and/or other
affiliated  entities.  These advances  generally bear interest at  approximately
13%, are unsecured and contain no specified repayment terms.

      In 1998, the  Corporation  purchased a 25% interest in a Park in which Mr.
Sutter owns the remaining 75%. The purchase price was approximately  $556,000 in
cash. In addition, the Corporation has agreed to loan the Park up to $350,000 to
fund cash flow needs.  Through the date of this Form 10-KSB, the Corporation has
advanced $125,000 under this  arrangement.  The advances bear interest at 12.9%,
are unsecured and have no specified repayment terms.

Item 13-Exhibits, Financial Statement Schedules and Reports on Form 8-K

Exhibits - None.

Financial Statement Schedules - None.

Reports on Form 8-K - None.

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<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.


                            STERLING FINANCIAL SERVICES OF FLORIDA I, INC.

                  By:       /s/ Anthony A. Sutter
                     ___________________________________________________
                            Chief Executive Officer

Dated:  June 15, 1999


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


SIGNATURE                   TITLE                            DATE

                            Director, Chief  Accounting       June 15, 1999
/s/ Anthony A. Sutter       Officer
----------------------------




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