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18


                       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, 1998

  ( ) 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: $416,439.00

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  at  December  31, 1998 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 July 31, 1999.
                        1,000 Common Shares
                   Documents Incorporated By Reference - NONE

                Transitional small business disclosure format. ___ Yes _X_No
                       Sterling Financial Services of Florida I, Inc.
                                  FORM 10 - KSB
0
<PAGE>

                                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           12
              ITEM 6. Management's Discussion and Analysis
                      of Financial Condition and Results
                      of Operations (including Year 2000    12
                      issue and  Cautionary Statement)
              ITEM 7. Financial Statements                  17
              ITEM 8. Changes In and Disagreements With     32
                      Accountants on Accounting and
                      Financial Disclosures

     PART III
              ITEM 9  Directors, Executive Officers,
                      Promoters and Control Persons;
                      Compliance with Section 16(a) of the  32
                      Exchange Act
              ITEM 10 Executive Compensation                33
              ITEM 11 Security Ownership of Certain         33
                      Beneficial Owners and Management
              ITEM 12 Certain Relationships and Related     34
                      Transactions
              ITEM 13 Exhibits, Financial Statement          35
                      Schedules and
                      Reports on Form 8-K

                      Signatures                            36


1
<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,  buy and
sell such  parks or  provide  financing  to others  for such  purposes;  and (3)
purchase other sub-prime financial companies in the mobile home lending business
(collectively, the "Other Activities").

      Prior to June 30, 1999 (when the offering terminated), the Corporation was
offering  subscriptions for a maximum $9,900,000 of secured notes payable in the
principal  amount of $1,000 each (the  "Notes").  The Notes  provide for monthly
interest  payments  at the rate of 10.5% per annum,  and are  payable in full on
June 30, 2002.  During the respective  periods ended December 31, 1998 and 1997,
the Corporation sold $4,362,000 and $1,612,000 of Notes.  Subsequent to December
31, 1998, and through June 30, 1999, the Corporation  sold additional  Notes for
$3,844,000. Accordingly, in total the Corporation sold $9,818,000 of Notes.

      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
intent to provide  certain  floor plan  financing  to mobile  home  dealers.  In
addition,   from  time  to  time,  it  was  anticipated  the  Corporation  would
participate in Other Activities.  Notwithstanding  such parameters,  most the of
the  Corporation's  outstanding  finance  receivables  have been  purchased from
dealers at a discount.

2
<PAGE>

In  addition,  in August  1998,  the  Corporation  purchased  a 25%  interest in
Parkwood Estates Mobile Home Park, L.C. ("Parkwood"). Parkwood, which is related
to the  Corporation  by virtue of Anthony  Sutter's  75%  ownership  interest in
Parkwood (Mr. Sutter is the Corporation's  President and majority  stockholder).
used these funds to purchase  Parkwood  Estates  Mobile Home Park, a mobile home
park located in Hillsborough County, Florida (the "Park").

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  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  available for the 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.
3
<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  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 sub-prime  borrowers
impose interest rates significantly  higher than lenders to prime borrowers.  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.  These  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
originates or purchases,  or result in the Corporation  originating Contracts of
lesser quality, which could reduce or eliminate payments to Note Holders.
4
<PAGE>

ORIGINATION AND SERVICING OF CONTRACTS

      The Corporation has engaged 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 of the borrower (see below);

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;
      if the borrower is receiving  child  support,  such income will only be
      considered if court mandated;
5
<PAGE>

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.
6
<PAGE>

      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  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;  to or  repossess  collateral  in the event of  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 Home is sold
or six months from the inception of the advance.

OTHER ACTIVITIES

      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,  buy
and sell such parks or provide  financing  to others for such  purpose;  and (3)
purchase  other  sub-prime  financial  companies  in  the  mobile  home  lending

7
<PAGE>

business.  In  connection  therewith,  in 1998 the  Corporation  purchased a 25%
interest in Parkwood  Estates Mobile Home Park, L.C.  ("Parkwood")  which owns a
mobile home park in Hillsborough  County,  Florida (the  Corporation's  majority
stockholder and President owns the remaining 75% of Parkwood).  In addition, the
Corporation has purchased a significant  amount of 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  Corporation's  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.  In addition,  Florida has  consistently  been a  pacesetter  in new
business  incorporation,  and 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 has limited its operations to Florida, a
downturn in the Florida economy could adversely affect the Corporation's results
of operations inasmuch as the  creditworthiness  of the Corporation's  borrowers
and/or  prospective  borrowers  could  be  impaired.  Although  the  Corporation
believes Florida's economy will continue to grow, there can be no assurance this
will occur.  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.
8
<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  Financing
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.  Also  there is no  assurance  laws and
regulations   under  which  the  Corporation   operates  will  not  become  more
restrictive;  this 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 Contract  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.
9
<PAGE>


      The  Corporation  will pay the  Servicing  Company an amount  equal to all
expenses of the Servicing  Company computed on an accrual basis ("Actual Costs")
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.
10
<PAGE>

      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
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.

EMPLOYEES

      As of December  31,  1998,  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. Prior to April 1998, the office was leased from Halliday
Village  Mobile Home Park,  Inc.,  an entity  wholly owned by the  Corporation's
majority  stockholder  and  President  under an informal  arrangement  requiring
monthly rent of $2,200.  Subsequent to April 1998,  the  Corporation's  rent was
paid by the Servicing  Company,  and accordingly,  such expenses are paid to the
Servicing  Company  in  accordance  with the  Servicing  Agreement  between  the
Corporation and the Servicing Company.

ITEM 3 - LEGAL PROCEEDINGS

      NONE

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

      NONE

11
<PAGE>


                              PART II.

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

      NONE

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

OVERVIEW

      The Corporation is primarily in the business of originating and purchasing
retail mobile home  installment  sales contracts  created in connection with the
financing of  manufactured  homes.  The  Corporation  also owns and rents mobile
homes,  located in the Halliday  Village  Mobile Home Park,  a related  party by
virtue of common  ownership,  ("Halliday")  and has a 25% ownership  interest in
Parkwood  which was formed in 1998 for the  purpose of  purchasing,  and leasing
Parkwood Estates Mobile Home Park in Hillsborough County,  Florida (the "Park").
The Corporation's operations are located in Tampa, Florida and substantially all
of its customers are Florida residents.

      Readers  are  referred  to  the  cautionary  statement,   which  addresses
forward-looking statements made by the Corporation.

RESULTS OF OPERATIONS

      The Corporation  generated revenues of $416,439 and $25,449,  respectively
during the year ended  December 31, 1998 and the period January 3, 1997 (date of
inception)  to  December  31,  1997  (the  Corporation  was  considered  to be a
development stage enterprise through December 31, 1997). Because the Corporation
did not have significant  revenues during its development  stage,  this analysis
does not include any additional discussion on such revenues.  Revenues generated
in 1998 resulted substantially from interest and fees of approximately $276,000.
This amount  consisted  of interest  and fees earned on finance  receivables  of
approximately  $153,000,  interest earned on cash  equivalents of  approximately
$72,000,  interest  and fees  earned on mobile  home floor plan  receivables  of
approximately   $48,000  and  interest   earned  on  affiliate   receivables  of
approximately  $3,000  (interest  income  on cash  equivalents  was  significant
because of the lag time  between the receipt of proceeds  from sale of the Notes
and the date the funds were invested in finance  and/or other  interest  bearing
receivables).  In  addition  to  interest  and  fee  revenues,  the  Corporation
generated  approximately  $93,000 of rental  revenues  from the rental of mobile
homes  owned by the  Corporation,  and  $35,000 of  revenues  from the sale of a
mobile home.

      During the year ended  December  31,  1998 and the period  January 3, 1997
(date of inception) to December 31, 1997, the Corporation  incurred  expenses of
$1,188,696 and
12
<PAGE>


      $176,986,  respectively,  an  increase  of  85%.  These  expenses  related
substantially  to interest paid on the Notes and management  fees paid under the
aforementioned Servicing Agreement.

      Interest  expense  increased  by 85% from  approximately  $72,000  for the
period  ended  December  31, 1997 to  approximately  $481,000 for the year ended
December  31,  1998.  These  amounts  consisted  of  interest  on the  Notes  of
approximately  $387,000  and  $49,000,  respectively  (an  increase  of 87%) and
amortization  of  deferred  debt  issuance  costs of  approximately  $94,000 and
$23,000,  respectively  (an increase of 75%).  The deferred debt issuance  costs
arose from  commissions  and other  costs  incurred  in selling  the Notes.  The
significant  increase  in  interest  expense  resulted  from  the  corresponding
increase in the balances of the Notes.

      Management  fees  increased by 86% during the year ended December 31, 1998
in comparison to the preceding  fiscal period.  The increase from  approximately
$62,000  to  approximately  $442,000  resulted  because  the  Servicing  Company
required  additional  personnel  and  expenses  to  originate  and  service  the
Corporation's finance and mobile home floor plan receivables,  as well as manage
the Corporation's operations.

      Occupancy  and equipment  expenses  increased by 83% during the year ended
December 31, 1998 in  comparison to the preceding  fiscal  period.  The increase
from approximately $24,000 to approximately $143,000 resulted substantially from
the increase in property and equipment,  including rental homes purchased and/or
improved by the Corporation.  In 1997, such expenses consisted  substantially of
lot and office rent of  approximately  $15,000 and depreciation of approximately
$6,000.  During the year ended  December  31,  1998,  lot and office  rent,  and
depreciation  expense  increased to $95,000 (an increase of 84%) and $21,000 (an
increase  of 71%),  respectively,  and the  Corporation  incurred  approximately
$26,000 of repairs and maintenance  expense.  With respect to the  Corporation's
rental  homes,  the  Corporation  rents lot space from  Halliday.  In connection
therewith,  the  Corporation  paid lot  rent of  approximately  $86,000  to such
affiliate in 1998. In addition,  prior to April 30, 1998, the Corporation rented
its  administrative  offices from Halliday for  approximately  $2,200 per month.
Subsequently,  the  Corporation  paid such expense to the  Servicing  Company in
accordance   with  the   aforementioned   Servicing   Agreement  -  see  Certain
Relationships and Related Transactions.

      The December 31, 1998 results of operations  also included  recognition of
the  Corporation's  loss of  approximately  $14,000  in  Parkwood.  This  amount
represents  25% (the  Corporation's  ownership  percentage)  of the  total  loss
generated  by Parkwood  during its initial  period of  operations  - see Certain
Relationships and Related Transactions.

      The only  other  expense  of  significance  in 1998  (there  were  none of
significance in 1997) resulted from the cost of a Home sold by the  Corporation.
The Corporation  generated a 30% profit margin on the sale of the Home and it is
anticipated  that sales,  and related  cost of sales,  of Homes will result in a
substantial portion of operating revenues and expenses in future years.
13
<PAGE>


      The net losses incurred  during the respective  periods ended December 31,
1998 and 1997  were  $772,257  and  $151,537,  respectively.  The  losses  arose
substantially  because  the  Corporation's  revenue  generating  assets  did not
provide  sufficient  income to cover fixed expenses arising  substantially  from
interest  on the  Notes,  and  management  fees  paid  in  connection  with  the
origination and servicing of the Contracts.

LIQUIDITY AND CAPITAL RESOURCES

      Operating  activities  used  $1,024,227  and  $126,174  of cash during the
respective periods ended December 31, 1998 and 1997. The cash was used primarily
to fund the net losses for such  periods less certain  non-cash  expenses  (e.g.
depreciation  and  amortization  of deferred  debt  issuance  costs) and certain
accrued  expenses  which did not require the outlay of cash during the reporting
periods.  In addition,  during the year ended December 31, 1998, the Corporation
had  an  increase  in  mobile  home   inventories  of   approximately   $422,000
(representing  an increase of 97%).  The  Corporation  anticipates  that most of
these inventories will be sold at the Park.

      The  Corporation's  investing  activities  used $2,190,372 and $461,871 of
cash during the  respective  periods ended  December 31, 1998 and 1997.  Most of
this  cash was used as a result  of the net  change in  finance  and floor  plan
receivables  of  approximately  $1,502,000 and $283,000 (an increase of 81%) for
the  respective  periods ended December 31, 1998 and 1997. At December 31, 1998,
finance  receivables  had terms of 5 to 30 years and interest rates ranging from
12.9% to 17.9%.  The Corporation is attempting to limit its exposure to interest
rate spread by investing funds in finance and floor plan receivables as proceeds
are received from the Notes since the cost of the funds is significantly  higher
than the yield on cash and cash  equivalents.  In addition,  as mentioned above,
during the year  ended  December  31,  1998,  the  Corporation  purchased  a 25%
interest in Parkwood for  $561,606,  and  advanced  $55,000 to Parkwood for cash
flow needs.  This advance  resulted from an arrangement  between the Corporation
and Parkwood  whereby the Corporation has agreed to loan Parkwood up to $350,000
to fund its cash flow needs. Advances under the arrangement accrue interest at a
fixed  rate of 12.9%,  are  unsecured  and have no  specified  repayment  terms.
Finally, cash used for the purchase and/or improvement of property and equipment
increased  by 46%  from  approximately  $103,000  for the  fiscal  period  ended
December 31, 1997 to approximately $179,000 for the year ended December 31, 1998
(including   capital   expenditures  of  approximately   $83,000  and  $156,000,
respectively relating to rental homes owned by the Corporation).

      Cash used by operating  and investing  activities  was funded by financing
activities which generated net cash inflows of $3,681,072 and $1,404,478  during
the respective periods ended December 31, 1998 and 1997. This cash was generated
from the sale of the Notes  (resulting  in net cash  proceeds  of  approximately
$3,926,000, and $1,416,000,  respectively,  an increase of 64%, after payment of
deferred debt issuance  costs).  Through June 30, 1999 (the  termination date of
the offering), the Corporation was offering subscriptions for a maximum of 9,900
Notes in the principal  amount of $1,000 each. The Notes bear simple interest at


14
<PAGE>

10.5%  (interest  payable  monthly) and are payable in full on June 30, 2002. At
December 31, 1998, the Corporation  had sold $5,974,000 of Notes;  subsequently,
additional  Notes of $3,844,000 were sold.  Accordingly,  the  Corporation  sold
$9,818,000 of Notes or approximately  99% of the Notes initially  offered to the
public.  Because debt issuance  costs  approximated  10% of the Notes sold,  net
proceeds to the Corporation approximated $8,800,000 in total.

      The net impact of the above operating,  investing and financing activities
was that cash and cash  equivalents  increased by 42% from  $466,473 to $816,433
during the respective periods ended December 31, 1998 and 1997.

      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  significant cash from operations and/or secure additional
capital  resources (e.g.  other debt or equity).  No assurance can be given that
the  Corporation  will be able to generate  profitable  results of operations or
that additional  capital  resources will be available or available on reasonable
terms. Also, if the Corporation is unable to originate  receivable  contracts in
an amount and at a pace that  approximates  the amount and the pace that capital
is raised  through the sale of the Notes,  the  Corporation's  deficit  would be
expected to increase as the  interest  earned on the capital  raised will not be
sufficient to cover the cost of the interest on the Notes.

YEAR 2000 ISSUE

         Many software applications and operational programs written in the past
were not designed to recognize  calendar  dates  beginning in the Year 2000. The
failure  of such  applications  or  systems  to  properly  recognize  the  dates
beginning in the Year 2000 could result in  miscalculations  or system  failures
which could result in an adverse effect on the Corporation's operations.

         The Corporation does not currently  utilize any critical date sensitive
systems. Although many of the Corporation's  transactions rely on date sensitive
calculations, such calculations are currently being performed either manually or
using off the shelf spreadsheet programs.  However, the Corporation is currently
involved in installing a new PC based server and accounting  application,  which
is represented to be Year 2000 compliant.

         The Corporation has not incurred any costs to date related to Year 2000
compliance  nor does it believe that its cost of conversion  will be significant
because of the installation of new systems that are represented to be fully Year
2000 compliant.  The Corporation  believes the costs to transition its remaining
systems to Year 2000 compliance will not have a material effect on its financial
position or results of operations.

15
<PAGE>

         The Corporation has not deferred any information technology projects to
address the Year 2000 issue. In addition to internal Year 2000  activities,  the
Corporation will  communicate with others with which their systems  interface or
on which  they  rely to  determine  the  extent  to which  those  companies  are
addressing their Year 2000 compliance. There can be no assurance that there will
not be an adverse effect on the Corporation,  if third parties,  such as utility
companies or mobile home  suppliers,  do not convert  their  systems in a timely
manner and in a way that is compatible with the Corporation's systems.  However,
management  believes that ongoing  communication  with, and assessment of, these
third parties will minimize these risks.  Although the  Corporation  anticipates
minimal business disruption will occur as a result of Year 2000 issues, possible
consequences include, but are not limited to, loss of electric power,  inability
to process transactions or engage in similar business activities.

        To date,  the  Corporation  has not  established a contingency  plan for
possible  Year  2000  issues.  Where  needed,  the  Corporation  will  establish
contingency  plans  based on  assessment  of outside  risks and  actual  testing
experience with suppliers.  It is not anticipated  that a contingency  plan will
need to be developed as manual processes mitigate outside risks. The cost of the
conversion and the completion dates are based on management's best estimates and
may be updated, as additional information becomes available.

CAUTIONARY STATEMENT

        This Form  10-KSB,  press  releases  and  certain  information  provided
periodically  in writing or orally by the  Corporation's  officers or its agents
contain  statements  which  constitute  forward-looking  statements  within  the
meaning of Section 27A of the Securities  Act, as amended and Section 21E of the
Securities Exchange Act of 1934. The words expect,  anticipate,  believe,  goal,
plan,  intend,  estimate and similar  expressions and variations thereof if used
are  intended  to  specifically  identify  forward-looking   statements.   Those
statements appear in a number of places in this Form 10-KSB and in other places,
particularly,  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations,  and include statements  regarding the intent,  belief or
current  expectations  of the  Corporation,  its  directors or its officers with
respect to, among other  things:  (i) the  Corporation's  liquidity  and capital
resources;  (ii) its  financing  opportunities  and plans  and (iii) its  future
performance  and  operating  results.  Investors and  prospective  investors are
cautioned that any such forward-looking  statements are not guarantees of future
performance  and involve risks and  uncertainties,  and that actual  results may
differ  materially from those projected in the  forward-looking  statements as a
result of  various  factors.  The  factors  that might  cause  such  differences
include,  among  others:  (i)  any  material  inability  of the  Corporation  to
successfully  identify,  consummate  and  integrate the  acquisition  of finance
receivables at reasonable and anticipated  costs, (ii) any material inability of
the Corporation to successfully  develop its products;  (iii) any adverse effect
or limitations  caused by governmental  regulations;  (iv) any adverse effect on
the Corporation's  continued positive cash flow and ability to obtain acceptable
financing in connection with its growth plans; (v) any increased  competition in
business;  (vi) any inability of the  Corporation  to  successfully  conduct its
business in new markets; and (vii) other risks including those identified in the


16
<PAGE>

Corporation's filings with the SEC. The Corporation  undertakes no obligation to
publicly  update or revise  the  forward  looking  statements  made in this Form
10-KSB, to reflect events or circumstances after the date of this Form 10-KSB or
to reflect the occurrence of unanticipated events.

Impact of Inflation and Changing Prices

    Because the  Corporation's  Notes bear  interest at fixed  rates,  increased
costs of borrowed funds would not be expected to have a material  adverse impact
on  the  Corporation's  results  of  operations  unless  alternative  source  of
financing are required.  In this case,  inflationary  increases  could result in
higher  interest  rates  which  could  have a  material  adverse  impact  on the
Corporation's  ability to grow its business.  In addition,  inflation could also
adversely affect the Corporation's operating expenses.

ITEM 7 - FINANCIAL STATEMENTS

                       STERLING FINANCIAL SERVICES OF FLORIDA I, INC.

                                TABLE OF CONTENTS


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

                                                      Page

Independent Auditors' Report                                   1

Financial  Statements as of and for the year ended December 31, 1998 and for the
   period January 3, 1997 (date of inception) to December 31, 1997:

      Balance Sheets                                           2

      Statements of Operations                                 3

      Statements of Stockholders' Deficit                      4

      Statements of Cash Flows                                 5

      Notes to Financial Statements                            6


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

17
<PAGE>



(Letterhead of Beard, Nertney, Kingery, Crouse & Hohl, P.A.)




18
<PAGE>


                                   131
                                             42


INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying  balance sheets of Sterling  Financial Services
of Florida I, Inc.  (the  "Company")  as of December 31, 1998 and 1997,  and the
related statements of operations,  stockholders'  deficit and cash flows for the
year  ended  December  31,  1998 and 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 audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of the Company as of December 31,
1998 and 1997,  and the  results of its  operations  and cash flows for the year
ended  December 31, 1998 and for the period  January 3, 1997 (date of inception)
to  December  31,  1997  in  conformity  with  generally   accepted   accounting
principles.

As discussed in Notes D and G to the financial statements, there are significant
transactions  with related  parties.  These  transactions  include,  but are not
limited to, payment of management fees and advances to various affiliates.

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

June 18, 1999
Tampa, FL.



19
<PAGE>






            STERLING FINANCIAL SERVICES OF FLORIDA I, INC.

                BALANCE SHEETS AS OF DECEMBER 31, 1998 AND 1997

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

                                                     1998           1997
                                                     ----           ----
ASSETS

Cash and cash equivalents                         $1,282,906     $ 816,433
                                                 ------------   ------------

Receivables:
  Finance - net
                                                   1,485,697       196,503
  Mobile home floor plan
                                                     182,007        86,040
  Affiliate
                                                     257,278        12,550
  Interest and fees
                                                       8,920
                                                  ------------   ------------
    Total receivables                              1,933,902       295,093
                                                  ------------   ------------

Inventories                                          433,597        12,000
                                                  ------------   ------------

Investment in and advances to Parkwood Estates
   Mobile Home Park, L.C. (Related Party)
                                                     602,178
                                                  ------------

Property and equipment - net                         254,541        173,231
                                                  ------------   ------------

Other assets:
   Deferred debt issuance costs - net                514,999       172,856
   Repossessed mobile homes                           85,417
                                                  ------------   ------------
      Total other assets
                                                      600,416      172,856
                                                  ------------   ------------

TOTAL                                             $ 5,107,540   $1,469,613
                                                  ============  =============

LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES:
Secured notes payable                              $5,974,000    $1,612,000

Accrued and other liabilities                          56,334         8,150
                                                  ------------   ------------
      Total liabilities                             6,030,334     1,620,150
                                                  ------------   ------------

STOCKHOLDERS' DEFICIT:
Common  stock,  no  par  value,  10,000
shares authorized; 1,000 shares issued
and outstanding
                                                       1,000          1,000
Deficit                                             (923,794)      (151,537)
                                                  ------------   ------------
      Total stockholders' deficit                   (922,794)      (150,537)
                                                  ------------   ------------

TOTAL                                             $5,107,540     $1,469,613
                                                  ============   ============

--------------------------------------------------------------------------------
See notes to financial statements.

20
<PAGE>

                       STERLING FINANCIAL SERVICES OF FLORIDA I, INC.

                   STATEMENTS OF OPERATIONS FOR THE YEAR ENDED
                    DECEMBER 31, 1998 AND FOR THE PERIOD JANUARY 3, 1997
                    (DATE OF INCEPTION) TO DECEMBER 31, 1997

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


                                                        1998           1997
                                                        ----           ----
REVENUES:
Interest and fee                                     $   276,144    $19,189

Rental                                                    93,527      6,260

Mobile home sales                                         34,900
Other                                                     11,868
                                                     ------------   ------------
  Total revenues                                        416,439       25,449
                                                     ------------   ------------

OPERATING EXPENSES:
Interest expense                                        481,383       71,622

Management fees - Related Party                         442,328       62,368

Occupancy and equipment                                 142,768       23,697

Professional Fees
                                                         40,602
Cost of mobile homes sold
                                                         24,692
Equity in loss of Parkwood Estates
   Mobile Home Park, L.C. - Related Party
                                                         14,429
Other
                                                         42,494        19,299
                                                     ------------   ------------
  Total operating expenses                            1,188,696       176,986
                                                     ------------   ------------

NET LOSS                                             $(772,257)     $ (151,537)

                                                     ============   ============

LOSS PER COMMON SHARE                                $(772.26)      $(151.54)
                                                     ============   ============


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


See notes to financial statements.


21
<PAGE>


                       STERLING FINANCIAL SERVICES OF FLORIDA I, INC.
                       STATEMENTS OF STOCKHOLDERS' DEFICIT
                  FOR THE YEAR ENDED DECEMBER 31, 1998 AND FOR THE PERIOD
                  JANUARY 3, 1997 (DATE OF INCEPTION) TO DECEMBER 31, 1997

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                     Common Stock
                                  Shares       Amount        Deficit        Total
                                -----------   ---------   -------------  ------------
<S>                             <C>           <C>         <C>            <C>

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



Issuance of common stock             1,000       1,000                        1,000


Net loss                                                     (151,537)     (151,537)
                                -----------   ---------   -------------  ------------

Balances at December 31, 1997        1,000       1,000       (151,537)     (150,537)

Net loss                                                     (772,257)     (772,257)
                                -----------   ---------   -------------  ------------

Balances at December 31, 1998        1,000      $1,000     $ (923,794)    $(922,794)

                                ===========   =========   =============  ============







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







See notes to financial statements.


</TABLE>





22
<PAGE>


            STERLING FINANCIAL SERVICES OF FLORIDA I, INC.

STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1998 AND FOR THE PERIOD
JANUARY 3, 1997 (DATE OF INCEPTION) TO DECEMBER 31, 1997

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

                                                          1998          1997
                                                          ----          ----

CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                         $(772,257)     $(151,537)

     Adjustment to reconcile net loss to net cash
used by
       Operating activities:
       Depreciation                                       21,877          6,097
       Amortization and write off of deferred
debt issuance costs                                       94,057         23,116
       Equity in loss of Parkwood Estates Mobile
Home Park, L.C.                                           14,429
       Increase in inventories                          (421,597)       (12,000)
       Increase in accrued and other liabilities          48,184          8,150
       Increase in other receivables                      (8,920)
                                                      ------------  ------------
NET CASH USED BY OPERATING ACTIVITIES                 (1,024,227)      (126,174)
                                                      ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchases of property and equipment               (103,187)      (179,328)
      Proceeds from sales of repossessed mobile
homes                                                     31,506
      Investment in and advances to Parkwood
Estates
        Mobile Home Park L.C.                           (616,607)
      Finance and floor plan  receivables             (1,722,543)      (296,708)
originated and purchased
      Repayments of finance and floor plan
receivables                                              220,459         14,165
                                                      ------------  ------------
CASH USED BY INVESTING ACTIVITES                      (2,190,372)      (461,871)
                                                      ------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from issuance of common stock
                                                                         1,000
      Proceeds from issuance of secured notes
payable                                                4,362,000     1,612,000
      Increase in affiliate receivables                 (244,728)      (12,550)
      Cash paid for deferred debt issuance costs        (436,200)     (195,972)
                                                     ------------  -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES              3,681,072     1,404,478
                                                     ------------  -------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                466,473       816,433

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD           816,433             0
                                                     ------------  -------------

CASH AND CASH EQUIVALENTS, END OF PERIOD             $ 1,282,906    $  816,433
                                                     ===========   =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
    INFORMATION - Interest paid                      $   387,326   $    48,506
                                                     ============  =============

SUPPLEMENTAL DISCLOSURE NON-CASH INVESTING AND FINANCING ACTIVITIES - During the
year ended December 31, 1998,  $116,923 of finance receivables were reclassified
to repossessed  mobile homes when certain  customers of the Company defaulted on
their finance and floor plan receivables.

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

See notes to financial statements.



23
<PAGE>


                       STERLING FINANCIAL SERVICES OF FLORIDA I, INC.

                          NOTES TO FINANCIAL STATEMENTS
                  FOR THE YEAR ENDED DECEMBER 31, 1998 AND 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") was incorporated
under the laws of the state of Florida on January 3, 1997.  The  Company,  which
was in the development  stage through December 31, 1997, is primarily engaged in
the business of originating and purchasing  retail mobile home installment sales
contracts  created in connection with the financing of manufactured  homes.  The
Company also owns and rents mobile homes located in the Halliday  Village Mobile
Home Park,  and has a 25%  ownership  interest in a mobile home park  located in
Hillsborough County,  Florida (see Note D). The Company's operations are located
in Tampa, Florida and substantially all of its customers are Florida residents.


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  on  finance   receivables  and  fees  charged  on  floor  plan
receivables  are  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.

Mobile home sales and related  costs of mobile homes sold are recorded  when the
closing has occurred and title has passed.






24
<PAGE>


Use of Estimates

The preparation of financial  statements in accordance  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  reported  amounts  of assets  and  liabilities  and  disclosures  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.
Estimates  from  management  that are  critical  to the  accompanying  financial
statements  include the  appropriate  level or allowance for credit losses which
can be significantly  impacted by future industry,  market,  and economic trends
and conditions.
Actual results could differ significantly from those estimates.

Financial Instruments

The Company believes the book value of their cash and cash  equivalents,  mobile
home floor plan and  affiliate  receivables,  and accrued and other  liabilities
approximates  their fair values due to their  short-term  nature.  In  addition,
management  believes  the book value of their  finance  receivables  and secured
notes payable  approximates  their fair values as the current  interest rates on
such items  approximate rates at which similar types of lending and/or borrowing
arrangements could be currently negotiated by the Company.  Finally,  management
believes the book value of their  investment in Parkwood  approximates  its fair
value based on the results of an  independent  appraisal  of the related  mobile
home park. It was not  practicable to estimate the fair value of the advances to
Parkwood due to the lack of similar type  arrangements in the  marketplace,  and
because  of the  uncertainty  surrounding  the  date  the  receivables  will  be
recovered.

Finance Receivables

Finance receivables,  that management has the intent and ability to hold for the
foreseeable   future  or  until  maturity  or  payoff,  are  reported  at  their
outstanding  unpaid  principal  balances,  reduced by any charge-off or specific
valuation accounts and net of any deferred fees or costs on originated loans, or
unamortized premiums or discounts on purchased loans.

The Company enters into agreements with dealers that establish the allowance for
credit  losses  through  non-refundable  acquisition  discounts  to protect  the
Company from potential losses associated with the financing of installment sales
contracts.  All or a portion of these  negotiated  discounts  are  available  to
absorb credit losses.  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 losses.

Management  attempts  to  maintain  the  allowance  at a level  consistent  with
anticipated  loan charge offs,  and if necessary  will charge  earnings when the
negotiated discounts do



25
<PAGE>


not appear adequate to absorb losses.  The Company  calculates its provision for
credit  losses  based on changes in the present  value of  expected  future cash
flows  of its  loans  discounted  at  the  loan's  effective  interest  rate  in
accordance with Financial Accounting Standards No. 114. At December 31, 1998 and
1997,  management believes the unamortized discount balance is adequate to cover
potential loan losses. Accordingly, the accompanying statements of operations do
not include provisions for loan losses.

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.

Inventories

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

Investment in Parkwood Estates Mobile Home Park, L.C. ("Parkwood")

The Company uses the equity method to account for its 25% ownership  interest in
Parkwood.

Long-Lived Assets

The  Company  periodically  reviews its  long-lived  assets for  indications  of
impairment.  If the value of an asset is considered impaired, an impairment loss
would be recognized.

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 either
an accelerated  method or the  straight-line  method over the assets'  estimated
useful lives of 5 to 27.5 years.

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.  Approximately  $8,693  of these  costs  were  written  off as
impaired at December 31, 1997; such amount has been included in interest expense
in the accompanying 1997 statement of operations.


26
<PAGE>


Repossessed Mobile Homes

Repossessed  mobile  homes are  initially  recorded  at the lower of the assets'
estimated  fair market  value or the unpaid  balance of the related  loan at the
time of  repossession.  Costs of capital  improvements are added to the carrying
amount of the  repossessed  property,  to the  extent  they do not result in the
carrying amount exceeding net realizable value.

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.

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 year ended December 31, 1998 and
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.

Reclassifications

Certain  amounts in the 1997  financial  statements  have been  reclassified  to
conform to their 1998 classifications.

NOTE C - FINANCE RECEIVABLES - NET

Finance receivables consist of the following at December 31, 1998 and 1997:
                                                 1998           1997
                                                 ----           ----

   Finance receivables, gross                 $  4,410,710  $  426,121
   Less unearned finance charges                (2,793,778)   (210,487)
                                               -----------   ---------
   Finance receivables, principal                1,616,932     215,634
   Less allowance for loan losses (See Note A)    (131,235)    (19,131)
                                               -----------   ----------

   Finance receivables, net                    $ 1,485,697   $ 196,503
                                               ===========   =========

At December 31, 1998, finance  receivables have terms ranging from 5 to 30 years
and
27
<PAGE>


stated  interest  rates  ranging  from 12.9% to 17.9%.  At December 31, 1998 and
1997, no interest income had been suspended on finance receivables.

Principal  collections on finance receivables  approximated $134,000 and $14,000
for the year ended  December  31,  1998 and the period  January 3, 1997 (date of
inception) to December 31, 1997,  respectively.  These collections  approximated
16% and 12% of the average  outstanding,  principal  balances for 1998 and 1997,
respectively.  Contractual  maturities of the finance receivables by year are as
follows:

      Years Ending
      December 31,                                         Amounts

           1999                                        $   328,396
           2000                                            328,396
           2001                                            328,396
           2002                                            326,385
           2003                                            315,402
                 Thereafter                              2,783,735

           Total                                       $ 4,410,710
                                                       ===========

Changes in the allowance  for credit  losses during the year ended  December 31,
1998 and the period  January 3, 1997 (date of  inception)  to December 31, 1997,
were as follows:

                                                   1998          1997
                                                   ----          ----

      Beginning balances                        $  19,131     $    0

      Additions to loan loss reserves arising
        from discounts on purchased loans         112,104       19,131
      Discounts accreted to income                     0           0
      Finance receivables charged off                  0           0
                                               ------------    --------

      Ending balance                           $  131,235     $ 19,131
                                               ============   =========

      % of  finance receivables                       8.1%         8.9%
                                               ============   =========


NOTE D - INVESTMENT IN AND ADVANCES TO PARKWOOD

The Company has a 25% ownership  interest in Parkwood,  which was formed in 1998
for the purpose of purchasing,  and leasing Parkwood Estates Mobile Home Park in
Hillsborough  County,  Florida.  The  remaining 75% interest is owned by Anthony
Sutter (the Company's' President and majority stockholder). Summarized financial
information  for Parkwood as of and for the period ended December 31, 1998 is as
follows:

28
<PAGE>




                    SUMMARIZED BALANCE SHEET

ASSETS

Property and equipment                                     $ 2,234,071
Loan acquisition costs, net                                     37,115
Other                                                           10,814
                                                          -------------
Total                                                      $ 2,282,000
                                                          =============

LIABILITIES AND MEMBERS' CAPITAL

Mortgage notes payable to NationsBank N.A.                 $ 1,716,000
Due to affiliate                                                55,000
Accrued and other liabilities                                    7,111
                                                          -------------
   Total liabilities                                         1,778,111
                                                          -------------

Members' Capital:
Sterling Financial Services of Florida I, Inc.                 547,178
Anthony Sutter                                                 (43,289)
                                                          -------------
   Total member's capital                                      503,889
                                                          -------------

Total                                                       $2,282,000
                                                          =============

                        SUMMARIZED STATEMENT OF OPERATIONS

Revenues                                                  $     50,666
Operating expenses                                            (108,384)
                                                          -------------

Net loss                                                  $    (57,718)
                                                          =============

The due to affiliate  arises from  advances  under a line of credit  arrangement
with the Company, whereby the Company has agreed to loan Parkwood up to $350,000
to fund cash flow needs.  Advances under the  arrangement,  accrue interest at a
fixed  rate of 12.9%,  are  unsecured  and have no  specified  repayment  terms.
Through the date of this report,  Parkwood had borrowed  approximately  $125,000
from the Company under this arrangement.




29
<PAGE>


NOTE E - PROPERTY AND EQUIPMENT-NET

Property and equipment consists of the following at December 31, 1998 and 1997:

                                                    1998        1997

    Rental mobile homes                         $215,702    $157,956
    Furniture, fixtures and office equipment      66,985      21,372
    Less accumulated depreciation                (28,146)     (6,097)

    Property and equipment - net                $254,541    $173,231
                                                ========    ========


NOTE F - 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  notes for sale
through June 30, 1999 at which time the  offering  ends Through the date of this
report,  notes having a cumulative  principal  balance of  $8,392,000  have been
sold. 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 G - OTHER RELATED PARTY TRANSACTIONS

In 1997, the Company's majority  stockholder  advanced $30,350 to the Company of
which  $28,600  was  repaid  in 1997.  The  advances  were  and are,  unsecured,
non-interest bearing and due on demand.

The Company has entered into an agreement with Sterling Financial Services, Inc.
("SFS, Inc."), a related party by virtue of common ownership,  whereby SFS, Inc.
will manage the Company and provide all services in connection with  origination
and servicing of receivables.  As consideration for these services,  the Company
will pay SFS,  Inc. for all of its expenses  plus 20%.  Management  fees paid to
SFS, Inc. including direct and indirect charges allocated to the Company and the
20% fee, during the year ended December 31, 1998 and the period ended January 3,
1997 (date of inception) to December 31, 1997 approximated  $442,000 and $62,000
respectively.

The Company  rents  certain  lots for 18 mobile home rental  units it owns under
month to month  arrangements,  and prior to April 1998, certain office space for
its  administrative  operations  from Halliday  Village M.H.P.  ("Halliday"),  a
related party by virtue of Anthony Sutter's ownership.
30
<PAGE>



Subsequent  to  April  1998,  the  Company's  rent  was  paid by SFS,  Inc.  and
accordingly, such expenses are included in management fees discussed above.

During the year ended  December 31, 1998 and the period January 3, 1997 (date of
inception)  to  December  31,  1997,  the  Company  paid  rents to  Halliday  of
approximately $95,000 and $33,000, respectively.

The Company  periodically  advances  funds to various  entities owned by Anthony
Sutter, its President and majority  stockholder.  At December 31, 1998 and 1997,
affiliate receivables consist of the following:

                                                    1998           1997
                                                    ----           ----

        SFS, Inc.                                $226,978
        Hidden Oaks Mobile Home Park
                                                    8,000      $  2,000
        Regency Oaks Mobile Home Park
                                                    6,000
        Sterling Homes, Inc.
                                                   16,300        10,550
                                                 ------------  -------------

        Total                                    $257,278      $ 12,550
                                                 ============  =============

With the exception of the advance to SFS, Inc.,  which is non-interest  bearing,
all of the advances bear interest of 12.9%,  are unsecured and have no specified
repayment terms.


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

If the Company had elected to be taxed as a "C"  corporation  it would have been
required  to record a  provision  or benefit  for income  taxes.  The  following
information  presents the proforma net losses at December 31 1998 and 1997 as if
the Company was a "C" corporation.  The presentation  used is in accordance with
Financial Accounting Standards Statement No.
109, "Accounting for Income Taxes".

                                                1998            1997
                                                ----            ----

      Loss before income taxes               ($772,257)       ($151,537)
      Income tax expense (benefit)                 0                0
                                             ----------

      Net loss                               ($772,257)       ($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.

31
<PAGE>


NOTE I - CONCENTRATIONS OF CREDIT RISK

Financial  instruments,  which potentially subject the Company to concentrations
of credit risk consist primarily of receivables,  the investment in and advances
to  Parkwood  and cash  and cash  equivalents.  Since  substantially  all of the
receivables  and the investment in and advances to Parkwood arise from customers
or entities  located in Florida,  it is at least  reasonably  possible  that the
Company  could  experience  a severe  impact on its  operations  if the  Florida
economy had a downturn.  Management  believes  risk with  respect to finance and
mobile home floor plans is  partially  mitigated  because  the  receivables  are
collateralized by the 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, 1998 and 1997,  the  Company's  uninsured  cash
balances approximated $1,278,000 and $745,000 respectively.

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




32
<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,  1998 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,  and for 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.).  Mr. Sutter also owns a 75% interest in Parkwood  Mobile Home Park,  L.C.
(the remaining 25% is owned by the  Corporation).  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.

33
<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,  1998 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)

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


34
<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 sales 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 acts as agent
for the Corporation. During the year ended December 31, 1998, and for the period
January 3, 1997 (date of inception) to December 31, 1997, the  Corporation  paid
management fees of $442,328 and $62,368,  respectively to the Servicing  Company
under the terms of the Servicing  Agreement.  For a description of the Servicing
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.  To date, no such loan has been made to the
Servicing Company.

      The  Corporation's  executive  offices are located at 12408 North  Florida
Avenue,  Tampa,  Florida.  Pursuant to an oral agreement,  the office was leased
from Halliday  Village Mobile Park,  Inc., an entity wholly owned by Mr. Sutter,
on a month-to-month basis for $2,200 per month through April 30, 1998. Rent paid
under this arrangement to Halliday during the respective  periods ended December
31, 1998 and 1997 approximated $9,000 and $17,600,  respectively.  Subsequent to
April 30, 1998, the Corporation's  rent was paid by the Servicing  Company,  and
accordingly, such expenses are included in the management fees discussed above -
see "Business -  Relationship  with  Servicing  Company." The  Corporation  also
leases lot space for its mobile home rentals from Halliday. These lot spaces are
rented on a month to month  basis  and no  contract  or lease  has been  signed.
During the respective  periods ended December 31, 1998 and 1997, the Corporation
paid lot rents of approximately $86,000 and $18,000 to Halliday.

         During the year ended  December 31, 1998, the  Corporation  purchased a
25%  interest in Parkwood  Estates  Mobile Home Park,  L.C.  which was formed to
purchase and lease  Parkwood  Estates  Mobile Home Park located in  Hillsborough
County,  Florida. The purchase price was approximately  $561,000.  The remaining
75% interest is owned by Mr. Sutter. In addition,  the Corporation has agreed to
loan the Park up to  $350,000 to fund cash flow  needs,  and as of December  31,
1998 had advanced $55,000 under this  arrangement.  These advances bear interest
at 12.9%,  are unsecured and have no specified  repayment  terms. As of July 31,
1999, the Corporation has advanced approximated $145,000 under this arrangement.

35
<PAGE>

In addition, the Corporation periodically advances funds to other entities owned
by Anthony Sutter. At December 31, 1998 and 1997, affiliate receivables consists
of the following:


                                             1998                   1997
                                             ----                   ----

      The Servicing Company               $226,978
      Hidden Oaks Mobile Home Park           8,000                $ 2,000
      Regency Oaks Mobile Home Park          6,000
      Sterling Homes, Inc.                  16,300                 10,550
                                          --------                -------

         Total                            $257,278                $12,550
                                          ========                =======

With  the  exception  of  the  advance  to  the  Servicing  Company,   which  is
non-interest  bearing, all of the advances bear interest at 12.9%, are unsecured
and have no specified repayment terms.

ITEM 13-EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
                 FORMS 8-K

Exhibits - Amended Servicing Agreement.

Financial Statement Schedules - None.

Reports on Form 8-K - None.




36
<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:       ____________________________________________________
                            Chief Executive Officer

Dated:  July 31, 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       July 31, 1999
                            Officer
----------------------------



37
<PAGE>