U. S. Securities and Exchange Commission

Washington, D.C. 20549



FORM 10-QSB/A

(Mark One)



[X]

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended: June 30, 2004



[  ]

[  ]

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:  000-32495



PARAMCO
FINANCIAL GROUP, INC.

(Name
of small business issuer as

specified
in its charter)



|Delaware                              | 88-0441287               
|------------------------------------- | -------------------------
|(State
      or other jurisdiction of | (I.R.S.
      Employer   
|incorporation
      or organization)  | Identification
      No.)





2391
N.E. Loop 410, Suite 130, San Antonio, Texas 78217

(Address
of principal executive offices / Zip Code)



(210)
653-6999

(Issuer's
telephone number)



N/A

(Former
name, former address and former fiscal year, if changed since last report)



Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [X] No [ ]



Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:



Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court.  Yes [ ] No [ ]



Applicable only to corporate issuers:



State the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: 57,167,560 as August 17, 2004.



Transitional Small Business Disclosure Format (Check One):  Yes ____   No __X__





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PART I  FINANCIAL INFORMATION



Item 1.

Financial Statements





|PARAMCO FINANCIAL GROUP, INC.                                                           |                             |                                                                    |                            
|--------------------------------------------------------------------------------------- | --------------------------- | ------------------------------------------------------------------ | ---------------------------
|(A development stage company)                                                           |                             |                                                                    |                            
|CONSOLIDATED BALANCE SHEET                                                              |                             |                                                                    |                            
|JUNE 30, 2004                                                                           |                             |                                                                    |                            
|(UNAUDITED)                                                                             |                             |                                                                    |                            
|                                                                                        |                             |                                                                    |                            
|ASSETS                                                                                  |                             |                                                                    |                            
|                                                                                        |                             |                                                                    |                            
|                                                                                        |                             |                                                                    |                            
|                                                                                        | CURRENT ASSETS:             |                                                                    |                            
|                                                                                        |                             | Cash & cash equivalents                                            |                            
|                                                                                        |                             | Deposit                                                            |                            
|                                                                                        |                             | Marketable Securities                                              |                            
|                                                                                        |                             | Note receivable                                                    |                            
|                                                                                        |                             |                                                                    |                            
|                                                                                        |                             |                                                                    |                            
|                                                                                        |                             |                                                                    |                            
|                                                                                        |                             |                                                                    |                            
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                   |                             |                                                                    |                            
|                                                                                        |                             |                                                                    |                            
|                                                                                        | CURRENT LIABILITIES:        |                                                                    |                            
|                                                                                        |                             | Accounts payable and accrued expenses                              |                            
|                                                                                        |                             | Notes payable                                                      |                            
|                                                                                        |                             | Due to Officers                                                    |                            
|                                                                                        |                             | Convertible notes payable                                          |                            
|                                                                                        |                             |                                                                    |                            
|                                                                                        |                             |                                                                    |                            
|                                                                                        | COMMITMENTS & CONTINGENCIES |                                                                    |                            
|                                                                                        |                             |                                                                    |                            
|                                                                                        | STOCKHOLDERS' DEFICIT:      |                                                                    |                            
|                                                                                        |                             | Preferred stock - unclassified, $0.001 par value, 5,969,000        |                            
|                                                                                        |                             | shares authorized, none issued                                     |                            
|                                                                                        |                             | Preferred Stock - Series A convertible $0.001 par value per share, |                            
|                                                                                        |                             | 131,000  shares authorized, 131,000 shares issued                  |                            
|                                                                                        |                             | Preferred Stock - Series B convertible $0.001 par value per share, |                            
|                                                                                        |                             | 3,750,000  shares authorized, none issued                          |                            
|                                                                                        |                             | Preferred Stock - Series C convertible $0.001 par value per share, |                            
|                                                                                        |                             | 150,000  shares authorized, none issued                            |                            
|                                                                                        |                             | Common stock, $0.001 par value, 100,000,000 shares authorized,     |                            
|                                                                                        |                             | 57,067,560 issued, 53,351,160 outstanding                          |                            
|                                                                                        |                             | Additional paid-in capital                                         |                            
|                                                                                        |                             | Shares to be issued                                                |                            
|                                                                                        |                             | Note receivable - Preferred stock                                  |                            
|                                                                                        |                             | Accumulated other comprehensive loss                               |                            
|                                                                                        |                             | Deficit accumulated during the development stage                   |                            
|                                                                                        |                             |                                                                    | Total stockholders' deficit
|                                                                                        |                             |                                                                    |                            
|                                                                                        |                             |                                                                    |                            
|                                                                                        |                             |                                                                    |                            
|The accompanying notes are an integral part of these consolidated financial statements. |                            
|                                                                                        |                             |                                                                    |                            





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|PARAMCO FINANCIAL GROUP, INC.                                                                                    | 
|---------------------------------------------------------------------------------------------------------------- | 
|(A development stage company)                                                                                    | 
|CONSOLIDATED STATEMENTS OF OPERATIONS                                                                            | 
|FOR THE THREE AND SIX MONTHS ENDED MARCH 31, AND JUNE 30, 2004 AND 2003                                          | 
|AND  THE PERIOD FROM APRIL 22, 1996 (INCEPTION) TO JUNE 30, 2004                                                 | 
|(UNAUDITED)                                                                                                      | 
|                                                                                                                 | 
|April 22, 1996                                                                                                   | 
|                                                                                                                 | 
|                                                                                                                 | 
|Net revenue                                                                                                      | 
|                                                                                                                 | 
|Operating expenses                                                                                               | 
|                                                                                                                 | 
|Loss from operations                                                                                             | 
|                                                                                                                 | 
|Other income (expense):                                                                                          | 
|Loss on permenant decline of marketable securities                                                               | 
|Litigation settlement                                                                                            | 
|Recapitalization costs                                                                                           | 
|Interest income                                                                                                  | 
|Miscellenous Expense                                                                                             | 
|Interest expense                                                                                                 | 
|Total other income (expense)                                                                                     | 
|                                                                                                                 | 
|Net loss                                                                                                         | 
|                                                                                                                 | 
|Unrealized loss on marketable securities                                                                         | 
|                                                                                                                 | 
|Comprehensive Loss                                                                                               | 
|                                                                                                                 | 
|Basic and diluted net loss per share:                                                                            | 
|                                                                                                                 | 
|Basic and diluted weighted average                                                                               | 
|shares outstanding                                                                                               | 
|                                                                                                                 | 
|                                                                                                                 | 
|Basic and diluted weighted average shares outstanding have been restated for 2001 to affect the recapitalization | 
|upon reverse merger on September 10, 2002.                                                                       | 
|                                                                                                                 | 
|Basic and diluted weighted average shares outstanding have been restated for all the periods in connection with  | 
|the reorganization on April 8, 2003.                                                                             | 
|                                                                                                                 | 
|The accompanying notes are an integral part of these consolidated financial statements.                          | 
|                                                                                                                 | 





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| | PARAMCO FINANCIAL GROUP, INC.                                   |                                                      
| | --------------------------------------------------------------- | -----------------------------------------------------
| | (A development stage company)                                   |                                                      
| | CONSOLIDATED STATEMENTS OF CASH FLOW                            |                                                      
| | FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2004 AND 2003          |                                                      
| | AND THE PERIOD FROM APRIL 22, 1996 (INCEPTION) TO JUNE 30, 2004 |                                                      
| | (UNAUDITED)                                                     |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| | CASH FLOWS FROM OPERATING ACTIVITIES:                           |                                                      
| |                                                                 | Net loss                                             
| |                                                                 | Adjustments to reconcile net loss to net cash used in
| |                                                                 | operating activities:                                
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 | Total Adjustments                                    
| |                                                                 |                                                      
| |                                                                 |                                                      
| | CASH FLOWS FROM FINANCING ACTIVITIES:                           |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| | CASH FLOWS FROM INVESTING ACTIVITIES                            |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      
| | NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS              | $                                                    
| |                                                                 |                                                      
| | CASH & CASH EQUIVALENTS, BEGINNING BALANCE                      |                                                      
| |                                                                 |                                                      
| | CASH & CASH EQUIVALENTS, ENDING BALANCE                         | $                                                    
| |                                                                 |                                                      
| |                                                                 |                                                      
| |                                                                 |                                                      





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PARAMCO FINANCIAL GROUP, INC.

(A development stage company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





Note 1 - Basis of presentation



GENERAL



Paramco Financial Group, Inc.. (the Company) has elected to omit substantially all
footnotes to the financial statements for the six months ended June 30, 2004 since there have been no material changes (other than indicated in other
footnotes) to the information previously reported by the Company in their Annual Report filed on the Form 10-KSB for the twelve months ended December
31, 2003.



The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for the presentation of interim financial information, but do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.  The audited consolidated financial statements for the year ended December 31, 2003 were filed on April 15, 2004 with the Securities and Exchange Commission and are hereby referenced.



In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three and six month  periods ended March 31, and June 30, 2004 are not necessarily indicative of the results that may be expected for the year ended December 31, 2004.



The accounting policies of the Company are in accordance with generally accepted accounting principles and conform to the standards applicable to development stage
companies.



Reclassifications



Certain comparative amounts have been reclassified to conform to the current year's presentation.





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PARAMCO FINANCIAL GROUP, INC.

(A development stage company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





OTHER FOOTNOTES



Due to officers

This includes $32,000 represented by a short-term, non interest bearing loan due on demand and an aggregate of $950,771 due to the officers as compensation, of which $144,828 and $289,656 was earned in the periods ended March 31, and June 30, 2004, respectively.





Common Stock Transactions

During the period ended June 30, 2004 the Company had the following common stock transactions:



o

Issued 15,611,100 shares of common stock for services valued at $2,126,567.



o

Cancelled 2,800,000 shares of common stock issued for services valued at $445,000.



o

Contracted to issue 1,442,492 shares of common stock in exchange for services valued at $48,000.



o

Contracted to issue 100,000 shares of common stock for $12,000 cash received.



o

Wrote off $434,500 of Unamortized Consulting Fees as a result of termination of consulting contract.



o

Received $53,180 for 279,500 shares of common stock issued in 2003 and the period ended March 31, 2004.



o

Cancelled 1,500,000 shares of common stock issued for a Note Receivable of $75,000







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Supplemental disclosure of cash flows



The Company prepares its statements of cash flows using the indirect method as defined under the Financial Accounting Standard No. 95.



The Company paid $0 for income tax during the three and six month periods ended March 31, and June 30, 2004 and 2003. The Company paid $47,398, $46,657, $27,611and ($15972) for interest during the three and six month periods ended March 31, and June 30, 2004 and 2003, respectively.



Going concern



These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.  As of June 30, 2004, the Company has accumulated operating losses of $10,647,709 since inception, including a net loss of $2,951,381 for the six month period ended June 30, 2004. The Company's ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations.  Management plans to raise equity capital to finance the operating and capital requirements of the Company.  Amounts raised will be used for further development of the Company's products, to provide financing for marketing and promotion, to secure additional property and equipment, and for other working capital purposes. While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.



Item 2.

Managements Discussion and Analysis or Plan of Operation



Forward-Looking Statements



This Quarterly Report for Paramco Financial Group, Inc. (the Company) contains forward-looking statements about our business, financial condition and prospects that reflect managements assumptions and beliefs based on information currently available.  We can give no assurance that the expectations indicated by such forward-looking statements will be realized.  If any of our managements assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, our actual results may differ materially from those indicated by the forward-looking statements.



The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to expand our customer base, managements ability to raise capital in the future, the retention of key employees, intense competition in our industry, changes in the regulation of our industry, seasonality of quarterly results, general economic downturns, and other risks detailed from time to time in the Companys filings with the Securities and Exchange (the SEC).



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There may be other risks and circumstances that management may be unable to predict.  When used in this Quarterly Report, words such as, believes, expects, intends, plans, anticipates, estimates and similar expressions are intended to identify forward-looking statements, as defined in Section 21E of the Securities Exchange Act of 1934, although there may be certain forward-looking statements not accompanied by such expressions.



Readers are urged to carefully review and consider the various disclosures made by the Company in this Quarterly Report, as an attempt to advise interested parties of the risks and factors that my affect the Companys business, financial conditions, and results of operations and prospects.



Recent Changes in Business Strategy, Change in Control and Change in Corporate Structure



On July 13, 1999, we were incorporated in the State of Nevada under the name Prestige Jewelry, Inc. and on February 4, 2002 our name was changed to The Prestige Group.Net, Inc.  Effective April 8, 2003, we changed our state of domicile to Delaware.  We sometimes refer to our company in this Annual Report as the Company.



On July 16, 2002, Ashford Capital LLC, a California limited liability company (Ashford), sold 2,660,000 shares of our common stock to Airline Communications, Ltd., a Nevada corporation (Airline).  This stock represented 60.92% of the total issued and outstanding common stock of the Company and constituted a change of control of the Company.



In conjunction with the acquisition of a controlling interest in the common stock of the Company, on July 16, 2002, the Board of Directors elected Douglas G. Gregg and Paul S. Sidey to be members of the Board of Directors.  Immediately thereafter, Joseph M. Dzierwa and Pamela J. Dzierwa resigned as Directors of the Company.  Neither Mr. nor Ms. Dzierwa had, at the time of their resignations or at any prior time, any disagreement with the Company on any matter relating to the Companys operations, policies, or practices.  Their resignations were solely to facilitate the change in control of the Company.  In addition, on July 16, 2002, the Board of Directors elected Douglas G. Gregg as President and Acting Chief Financial Officer and Paul S. Sidey as Secretary.  Both Messrs. Gregg and Sidey were also directors, officers and shareholders of Airline at the time of the change of control and their election as officers and directors of the Company.



At that same time, we abandoned the intended focus of our business from a web-centered jewelry, precious metals, gemstone and one-of-a-kind commerce center, which was never implemented, and adopted a business strategy  a financial services firm, specifically, mortgages, equipment financing and leasing, business financing, and investments in mortgages and real property through a Real Estate Investment Trust.  In order to effectuate this business plan, we commenced a program of acquiring established businesses that operate in the financial services marketplace.



---





On September 10, 2002, we acquired Paramount Financial Group, Inc. ("Paramount") a Denver, Colorado-based corporation that Douglas G. Gregg, our then President, now Chairman of the Board and Chief Executive Officer, and one of our directors, founded in 1996.  At the time of the acquisition Mr. Gregg was a shareholder, director and President of Paramount.  Paramount specializes in the development and placement of private debt financing and commercial equipment leasing transactions.  Mr. Sidey, our then Secretary, now President, and one of our directors, was also a shareholder, Secretary and a director of Paramount.  The transaction provided for us to acquire 5,000,000 shares of common stock of Paramount, which constitutes all of the issued and outstanding capital stock of Paramount.  In exchange therefor, we issued 1,462,500 shares of our common stock to Douglas G. Gregg and 100,000 shares of our common stock of Paul S. Sidey.  At the time of its acquisition, Paramount also was structured with two wholly owned subsidiaries, Paramount Mortgage Investments, Inc. and Paramount Real Estate Investment Trust, Inc.  Although neither of these subsidiaries was operational at the time of the acquisition, both are poised to implement operations in the mortgage banking and real estate and mortgage investment business, respectively.



On September 27, 2002, Paramount filed an Amendment to its Articles of Incorporation with the Colorado Secretary of State to change its name to Paramco Financial Group, Inc.  Thereafter, on October 18, 2002, Paramco Financial Group, Inc. was merged with and into its parent, the Company, and the Company changed its name to Paramco Financial Group, Inc.  Articles of Merger were filed with the Nevada Secretary State and the Colorado Secretary of State on October 7, 2002 and October 29, 2002, respectively, both with the October 18, 2002 effective date.



On October 17, 2002, our subsidiaries, Paramount Mortgage Investments, Inc. and Paramount Real Estate Investment Trust, Inc. changed their names to Paramco Mortgage Corporation and Paramco Investments, Inc., respectively.



The acquisition by the Company of Paramco Financial Group, Inc. (formerly Paramount Financial Group, Inc.) and its subsidiaries, on September 30, 2002, was treated as a reverse acquisition for accounting purposes and the historical results reflected in the financial statements and discussed herein are those of the entity formerly known as Paramount Financial Group, Inc.



Our change of domicile reincorporation was effective on April 8, 2003, through the merger of Paramco Financial Group, Inc., a Nevada corporation with, and into Paramco Financial Group, Inc., a Delaware corporation, which was a wholly-owned subsidiary of the Nevada corporation.  As a result of the reincorporation, the Delaware corporation was the surviving and resulting company.



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On the effective date of our reincorporation, and subject to the terms of the reincorporation, (i) each ten outstanding shares of Nevada Company common stock were to be converted into one share of Delaware Company common stock, (ii) all fractional shares of Delaware Company common stock that a holder of shares of Nevada Company common stock would otherwise have been entitled to receive upon the exchange of common stock were to be canceled and each such holder was entitled to receive one whole share of Delaware Company common stock, and (iii) each outstanding share of Nevada Company common stock held by the Nevada Company was to be retired and canceled.



As of February 26, 2003, the record date for our stockholders consent, the authorized capital of the Nevada corporation consisted of 50,000,000 shares of common stock, $.001 par value, and 5,000,000 shares of Preferred Stock, $.001 par value.  Approximately 7,817,011 shares of the Nevada corporations common stock and 4,031,000 shares of the Nevada corporations preferred stock were designated and 281,000 shares were outstanding.  After the record date and prior to the effective date of the reincorporation, 4,677,046 shares of the Nevada corporations common stock were exchanged for 46,770 shares of Series D Convertible Preferred Stock of the Nevada corporation.  After the effective date of the reincorporation, the Series D Convertible Preferred Stock automatically converted into 23,385,230 shares of the Delaware corporations common stock.



On September 24, 2002, we entered into a Letter of Intent with Michael S. Goodlett and Terrence Riely to acquire all of the capital stock of Woodlands S.A. Financial Services, Inc. (Woodlands), a Texas corporation, based in San Antonio, Texas.  Woodlands provides financing for medical, credit card and other like receivables.  On January 31, 2003, this transaction closed.  Further information concerning the acquisition of Woodlands is contained in the Companys Current Report on Form 8-K, which was filed with the Securities and Exchange Commission on February 18, 2003.



On May 2, 2003, we entered into an Annulment and Amending Agreement with Michael S. Goodlett and Terrence Riely (the Amending Agreement) to annul the closing of the transaction provided for in the Purchase Agreement dated January 31, 2003, by and among the Company and Messrs. Goodlett and Riely (the Purchase Agreement).  As a result of the Amending Agreement, the parties have returned all of the capital stock of Woodlands to Messrs. Goodlett and Riely and Messrs. Goodlett and Riely have returned the 150,000 shares of the Companys Series C Convertible Preferred Stock to the Company.  The Amending Agreement also provides that the Purchase Agreement shall otherwise remain in full force and effect with an anticipated new closing date to occur upon completion of the audit of Woodlands financial statements and their delivery to, and their acceptance by, the Company.  In the event that the completion and acceptance is not completed by August 28, 2003, the Purchase Agreement is subject to cancellation by the Company at its sole option.   As of the date of this Quarterly Report the Company has not made a decision concerning cancellation of the proposed transaction.   Further information concerning the Amending Agreement is contained in the Companys Current Report on Form 8-K, which was filed with the Securities and Exchange Commission on May 6, 2003.



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On July 25, 2003, the Company acquired all of the issued and outstanding capital stock of Alliance Capital Group, Inc. (Alliance), a Delaware corporation, from Jimmy L. Pfeffer, Jr.  Alliance, based in Dallas, Texas, will be engaged in the business of purchasing and collecting delinquent credit card debt.  Alliance operates as a wholly owned subsidiary of the Company.  Further information concerning this acquisition is contained in the Companys Current Report on Form 8-K, which was filed with the Securities and Exchange Commission on May 30, 2003.



On September 19, 2003, the Company acquired all of the issued and outstanding capital stock of Royal Federal, Inc. (RFI), a Louisiana corporation, from Ronald P. Savoie and Lawrence B. Kolber.  RFI, based in New Orleans, Louisiana, will be engaged in the sub-prime, residential mortgage lending market in Louisiana and Mississippi.  RFI operates as a wholly owned subsidiary of the Company. Further information concerning this acquisition is contained in the Companys Current Report on Form 8-K, which was filed with the Securities and Exchange Commission on October 2, 2003.



On December 31, 2003, we entered into an Annulment and Amending Agreement with Jimmy L. Pfeffer, Jr. (the Alliance Amending Agreement) to annul the closing of the transaction provided for in the Purchase Agreement dated July 17, 2003, by and between the Company and Mr. Pfeffer (the Alliance Purchase Agreement), whereby the Company acquired all of the issued and outstanding capital stock of Alliance from Mr. Pfeffer in exchange for 120,000 shares of the Company's Common Stock. As a result of the Alliance Amending Agreement, the parties have returned all of the capital stock of Alliance to Mr. Pfeffer and Mr. Pfeffer has returned the 120,000 shares of the Company's Common Stock to the Company. The Alliance Amending Agreement also provides that the Alliance Purchase Agreement shall otherwise remain in full force and effect with an anticipated new closing date to occur upon completion of the audit of Alliance's financial statements and their delivery to, and their acceptance by, the Company. In the event that the completion and acceptance is not completed by September 30, 2004, the Alliance Purchase Agreement is subject to cancellation by the Company at its sole option.



On December 31, 2003, we entered into an Annulment and Amending Agreement with Ronald P. Savoie and Lawrence B. Kolber (the RFI Amending Agreement) to annul the closing of the transaction provided for in the Purchase Agreement dated September 19, 2003, by and among the Company and Messrs. Savoie and Kolber (the RFI Purchase Agreement), whereby the Company acquired all of the issued and outstanding capital stock of RFI from Messrs. Savoie and Kolber in exchange for an aggregate of 100,000 shares of the Company's Common Stock. As a result of the RFI Amending Agreement, the parties have returned all of the capital stock of RFI to Messrs. Savoie and Kolber and Messrs. Savoie and Kolber have returned and aggregate of 100,000 shares of the Company's Common Stock to the Company. The RFI Amending Agreement also provides that the RFI Purchase Agreement shall otherwise remain in full force and effect with an anticipated new closing date to occur upon completion of the audit of RFIs financial statements and their delivery to, and their acceptance by, the Company. In the event that the completion and acceptance is not completed by September 30, 2004, the RFI Purchase Agreement is subject to cancellation by the Company at its sole option.



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Our Companys common stock is quoted on the OTC Bulletin Board under the symbol PFDE.



Results of Operations



The acquisition by the Company of Paramco Financial Group, Inc. (formerly Paramount Financial Group, Inc.) and its subsidiaries, on September 30, 2002, was treated as a reverse acquisition for accounting purposes and the historical results reflected in the financial statements and discussed herein are those of the entity formerly known as Paramount Financial Group, Inc.



Results of Operations



Operations for the six months ended June 30, 2004, as compared to the six months ended June 30, 2003.



Revenues



The Company had non operating revenue of $16,000 during the six months ended June 30, 2004 resulting from a reimbursement of unspecified expenses by a consultant resulting from investigation of possible acquisitions. There was no revenue for the six months ended June 30, 2003 due to restructuring and changing the focus of the business.



Expenses



Operating expenses for the six months ended June 30, 2004, were $2,951,381 compared to $1,896,813 in 2003.  This represents an increase of $1,054,568 or 56%, in operating expenses from the comparable period ended June 30, 2003.  Total expenses, including operating expenses, net interest and unrealized loss on marketable securities for the six months ended June 30, 2004 were $2,999,381. This represents an increase of $1,102,568, or 58%, from the comparable period ended June 30, 2003, when we reported total expenses of $1,896,813. Most of the increase in operating expenses is attributable to the issuance of common stock for services of consultants and others to help with mergers & acquisitions and other business plans and strategies. $434,500 of the increase resulted from the write off of unamortized consulting fee from the termination of the contract.



Net Profit (Loss)



During the three and six months ended March 31 and June 30, 2004, our loss per share was $.11 and $.12 compared to $.51 and $.62 per share for the respective periods in 2003.



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Liquidity and Capital Resources



In the six months ended June 30, 2004, net cash of $125,180 was used by operating activities, as compared to the prior period, when operating activities used $302,788.  During the six months ended June 30, 2004 financing activities provided net cash of $125,180, as compared to $318,831 provided in the prior period.  The cash provided by financing during 2004 came from cash advances from an officer of $32,000, sale of common stock of $53,180 and payments on a note receivable for stock of $40,000.  During 2003 the cash came from the sale of promissory notes of $477,475 less repayments of promissory notes of $93,742 and re-payments of loans from officers of $64,900.



As of the end of our second quarter on June 30, 2004, we had no cash available.  Our management believes that to meet our needs for our 2004 fiscal year the Company requires immediate proceeds from debt or equity financing to provide it with working capital adequate to proceed with its proposed acquisitions and to go forward with its plan of operations. Since our inception on, the Company has incurred an accumulated deficit of $10,647,709.



As a result of these factors, the Company's independent auditors issued their audit report for the fiscal year ended December 31, 2003 and 2002, with a going concern opinion: This raises substantial doubt about its ability to continue as a going concern.  None of the factors addressed by the Company's independent auditors has been mitigated and the going concern issues remain.   We intend for the Company to seek private equity and/or debt capital to initiate our mortgage operations by Paramco Mortgage Corporation and our investment operations by Paramco Investments, Inc. There can be no assurances that any such capital will be available on terms acceptable to us, or at all.  However, management believes that the new focus of our business on the financial services sector will enable us to acquire existing businesses in that sector and to utilize these acquisitions in an effort to raise the capital necessary to resolve these going concern issues.



Recent Accounting Pronouncements



On  April 30, 2003, the Financial Accounting Standards Board (FASB) issued FASB Statement  No. 149 (SFAS 149"), Amendment of Statement 133 on Derivative Instruments  and Hedging Activities. SFAS 149 amends and clarifies the accounting guidance on (1)   derivative instruments   (including   certain derivative   instruments embedded in other contracts) and (2) hedging activities that fall within the scope of FASB Statement No.  133 (SFAS 133), Accounting for Derivative Instruments and Hedging Activities.  SFAS 149 also amends certain other existing pronouncements,   which will result in more   consistent reporting of contracts that are derivatives in   their entirety or that contain embedded derivatives that warrant separate accounting. SFAS 149 is effective (1) for contracts entered into or modified after June 30, 2003, with certain exceptions, and (2) for hedging relationships designated after June 30, 2003.  The guidance is to be applied prospectively. The adoption of SFAS No. 149 does not have a material impact on the Companys financial position or results of operations or cash flows.



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On  May 15 2003, the FASB issued FASB Statement No. 150 (SFAS  150), Accounting for Certain Financial  Instruments with  Characteristics of both Liabilities and  Equity.  SFAS 150 changes the accounting for certain financial instruments that, under previous guidance, could be classified as equity or mezzanine equity, by now requiring those instruments to be   classified   as   liabilities  (or   assets   in   some circumstances)  in  the  statement  of  financial  position.  Further, SFAS 150 requires disclosure regarding the terms of those instruments and settlement alternatives.  SFAS 150 affects an entity's  classification  of  the   following freestanding   instruments:   a)   Mandatorily    redeemable instruments  b)  Financial  instruments  to  repurchase   an entity's  own  equity  instruments c) Financial  instruments embodying  obligations that the issuer must or could  choose to  settle  by  issuing a variable number of its  shares  or other  equity  instruments  based  solely  on  (i)  a  fixed monetary  amount known at inception or (ii) something  other than  changes in its own equity instruments d) SFAS 150 does not  apply  to  features embedded in a financial  instrument that  is  not a derivative in its entirety.  The guidance in SFAS 150 is  generally  effective  for  all   financial instruments entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. For private companies, mandatorily redeemable financial instruments are subject to the provisions of SFAS 150 for the fiscal period  beginning after  December 15, 2003. The adoption of SFAS No. 149 does not have a material  impact on  the  Company's  financial position or results of operations or cash flows.



In December 2003, FASB issued a revised Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46R). FIN 46R addresses consolidation by business enterprises of variable interest entities and significantly changes the consolidation application of consolidation policies to variable interest entities and, thus improves comparability between enterprises engaged in similar activities when those activities are conducted through variable interest entities. The Company does not hold any variable interest entities.



Item 3.

Controls and Procedures



Quarterly evaluation of the company's Disclosure Controls and Internal Controls.



Within the 90 days prior to the date of this Quarterly Report on Form 10-QSB, the company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (Disclosure Controls), and its internal controls and procedures for financial reporting (Internal Controls). This evaluation (the Controls Evaluation) was done under the supervision and with the participation of management, including our Chief Executive Officer (CEO) and Acting Chief Financial Officer (CFO). Rules adopted by the SEC require that in this section of the Quarterly Report we present the conclusions of the CEO and the CFO about the effectiveness of our Disclosure Controls and Internal Controls based on and as of the date of the Controls Evaluation.



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CEO and CFO Certifications.



Appearing immediately following the Signatures section of this Quarterly Report there is form of Certification of the CEO and the CFO. This Certification is required in accord with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certification). This section of the Quarterly Report which you are currently reading is the information concerning the Controls Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.



Disclosure Controls and Internal Controls.



Disclosure Controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 (Exchange Act), such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's (SEC) rules and forms. Disclosure Controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Internal Controls are procedures which are designed with the objective of providing reasonable assurance that (1) our transactions are properly authorized; (2) our assets are safeguarded against unauthorized or improper use; and (3) our transactions are properly recorded and reported, all to permit the preparation of our financial statements in conformity with generally accepted accounting principles.



Limitations on the Effectiveness of Controls.



The company's management, including the CEO and CFO, does not expect that our Disclosure Controls or our Internal Controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



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Scope of the Controls Evaluation.



The CEO/CFO evaluation of our Disclosure Controls and our Internal Controls included a review of the controls' objectives and design, the controls' implementation by the company and the effect of the controls on the information generated for use in this Quarterly Report. In the course of the Controls Evaluation, we sought to identify data errors, controls problems or acts of fraud and to confirm that appropriate corrective action, including process improvements, were being undertaken. This type of evaluation will be done on a quarterly basis so that the conclusions concerning controls effectiveness can be reported in our Quarterly Reports on Form 10-QSB and Annual Report on Form 10-KSB. Our Internal Controls are also evaluated on an ongoing basis by other personnel in our organization and by our independent auditors in connection with their audit and review activities. The overall goals of these various evaluation activities are to monitor our Disclosure Controls and our Internal Controls and to make modifications as necessary; our intent in this regard is that the Disclosure Controls and the Internal Controls will be maintained as dynamic systems that change (including with improvements and corrections) as conditions warrant. Among other matters, we sought in our evaluation to determine whether there were any significant deficiencies or material weaknesses in the company's Internal Controls, or whether the company had identified any acts of fraud involving personnel who have a significant role in the company's Internal Controls. This information was important both for the Controls Evaluation generally and because items 5 and 6 in the Section 302 Certifications of the CEO and CFO require that the CEO and CFO disclose that information to our Board's Audit Committee (or persons performing the equivalent functions) and to our independent auditors and to report on related matters in this section of the Quarterly Report. In the professional auditing literature, significant deficiencies are referred to as reportable conditions; these are control issues that could have a significant adverse effect on the ability to record, process, summarize and report financial data in the financial statements. A material weakness is defined in the auditing literature as a particularly serious reportable condition where the internal control does not reduce to a relatively low level the risk that misstatements caused by error or fraud may occur in amounts that would be material in relation to the financial statements and not be detected within a timely period by employees in the normal course of performing their assigned functions. We also sought to deal with other controls matters in the Controls Evaluation, and in each case if a problem was identified, we considered what revision, improvement and/or correction to make in accord with our on-going procedures.



In accord with SEC requirements, the CEO and CFO note that, since the date of the Controls Evaluation to the date of this Quarterly Report, there have been no significant changes in Internal Controls or in other factors that could significantly affect Internal Controls, including any corrective actions with regard to significant deficiencies and material weaknesses.



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Conclusions.



Based upon the Controls Evaluation, our CEO and CFO have concluded that, subject to the limitations noted above, our Disclosure Controls are effective to ensure that material information relating to the Company and its consolidated subsidiaries is made known to management, including the CEO and CFO, particularly during the period when our periodic reports are being prepared, and that our Internal Controls are effective to provide reasonable assurance that our financial statements are fairly presented in conformity with generally accepted accounting principles.





PART II - OTHER INFORMATION



Item 1.

Legal Proceedings



In the matter of the lawsuit styled Arthur Hall vs. Paramco Financial Group, Inc., District Court of Denver County, State of Colorado, Case No. 03 CV 2874 (previously discussed in the Companys Quarterly Report on Form 10-QSB, Part II, Item 1 thereof, which was filed with the Securities and Exchange Commission on August 19, 2003), the Company and the plaintiff entered into a settlement agreement in October 2003.  Based upon the inability of the Company to fully comply with the terms of the settlement agreement, in March 2004, a stipulated judgment was entered against the Company and in favor of the plaintiff in the amount of $152,500.



Other than the litigation described in the preceding paragraph, the Company is unaware of any pending or threatened litigation which might have a material effect on the Company or its business.



Item 2.

Change in Securities and Use of Proceeds



During the three months ended March 31, 2004, we issued an aggregate of 100,000 shares of our restricted common stock, valued at $0.12 per share, to one unrelated party who purchased the stock for cash.  This stock transaction was made in reliance upon the exemption from registration under Section 4(2) of the Securities Act of 1933, as amended.



The Company has not paid any dividends on its Common Stock and does not expect to do so in the foreseeable future.  The Company intends to apply its earnings, if any, in expanding its operations and related activities.  The payment of cash dividends in the future will be at the discretion of the Board of Directors and will depend upon such factors as earnings levels, capital requirements, the Companys financial condition and other factors deemed relevant by the Board of Directors.  Further, payment of cash dividends on our common stock is also subject to the approval of the holders of our Series A Preferred Stock.  In addition, the Companys ability to pay dividends may be limited under future loan agreements of the Company which restrict or prohibit the payment of dividends.



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Item 3.

Default Upon Senior Securities



Not applicable.



Item 4.

Submission of Matter to a Vote of Security Holders



Not applicable.



Item 5.

Other Information



(a)

Not applicable.



(b)

During the period covered by this report there were no material changes in the procedures by which security holders may recommend nominees to the Board of Directors.



Item 6.

Exhibits and Reports on Form 8-K





(a)

Exhibits:



|Exhibit
      Number | Description                                                                                                                            
|-------------------- | ---------------------------------------------------------------------------------------------------------------------------------------
|                     |                                                                                                                                        
|15                   | Report of Independent Registered
      Public Accounting Firm, Clyde Baily, P.C., dated January 18, 2005.                              
|                     |                                                                                                                                        
|31.1                 | Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of R. Michael
      Reyna, as Chief Executive Officer.   
|                     |                                                                                                                                        
|31.2                 | Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Douglas G.
      Gregg, as Chief Financial Officer.   
|                     |                                                                                                                                        
|32.1                 | *
       Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002 of R. Michael Reyna, as Chief Executive Officer.
|                     |                                                                                                                                        
|32.2                 | *
       Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002 of terrence Riely, as Chief Financial Officer.  
|                     |                                                                                                                                        



(b)   
Reports on Form 8-K.



No Current Reports on Form 8-K were by the Company during the three months ended June 30, 2004.



* This certification shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934,or otherwise subject to the liability of that section nor shall it be deemed to be incorporated by reference to any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.



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SIGNATURES



In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.





Registrant:
PARAMCO FINANCIAL GROUP, INC.





By:/s/ R. Michael Reyna

R.
Michael Reyna

President
and

Chief
Executive Officer



In
connection with the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.





Date:
January 19, 2005                                           
/s/ R. Michael Reyna

R. Michael Reyna

Director, President and Chief Executive Officer





Date:
January 19, 2005                                           
/s/ Terrence Riely

Terrence Riely

Chairman of the Board, Chief Financial Officer

and Principal Accounting Officer





Date:
January 19, 2005                                           
/s/ Michael S. Goodlett, Sr.

Michael S. Goodlett, Sr.

Director and Secretary