FORM 10-KSB
 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C.  20549

           ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
               THE SECURITIES EXCHANGE ACT OF 1934
           For the fiscal year ended December 31, 1996
(x) Annual report under section 13 or 15(d) of the Securities
Exchange Act of 1934
( ) Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934

Commission File Number 0-14888

                    PRIME CAPITAL CORPORATION
            (Name of small business issuer in its charter)
Delaware                                           36-3347311
(State or other jurisdiction                     (IRS Employer
of incorporation or organization)             Identification No.)

O'Hare International Center,
10275 W. Higgins Rd., Rosemont, IL                   60018-3890
(Address of principal executive offices)             (Zip Code)

Registrant's telephone number, including area code:(847) 294-6000

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

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.05 par value

Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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  (  ).

Check if disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. (  )

Issuer's revenues for year ending December 31, 1996: $17,481,773.

The approximate market value of stock held by non-affiliates was
$11,663,299 based upon 2,050,690 shares held by such persons and
a closing price of the Common Stock on February 28, 1997 of $5
11/16. The number of shares outstanding of the Registrant's $0.05
par value common stock at February 28, 1997 was 4,290,165.

Exhibit Index is located on page 37.  The total number of pages
is 41.
<PAGE>
                    PRIME CAPITAL CORPORATION
                           FORM 10-KSB
                  YEAR ENDED DECEMBER 31, 1996
                              INDEX


                             PART I

Item
Number                                                  Page
1.     BUSINESS                                         2

2.    PROPERTIES                                       7

3.    LEGAL PROCEEDINGS                                7

4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS                                          7


                             PART II

5.    MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
      STOCKHOLDER MATTERS                              7

6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
      FINANCIAL CONDITION AND RESULTS OF OPERATIONS    8

7.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA      15

8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND FINANCIAL DISCLOSURES             15

                            PART III

9.    DIRECTORS AND EXECUTIVE OFFICERS OF THE
      REGISTRANT                                       16

10.   EXECUTIVE COMPENSATION AND OTHER INFORMATION     18

11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
      AND MANAGEMENT                                   22

12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS   23

13.   EXHIBITS AND REPORTS ON FORM 8-K                 23








Item 1.   BUSINESS

General

The Company is a specialty finance organization providing
financial services to clients and customers throughout the United
States.  The Company's primary focus is on providing specialty
and high value-added financial products that are targeted to
specific markets through its three Business Units.  The target
markets of the Company are those that are underserved,
inefficient and/or fragmented, with the intention of being a
market-developer and capital provider to emerging and established
customers and clients that offer the highest growth potential.
The Company utilizes its financial engineering capabilities to
structure transactions which attempt to mitigate risk while
achieving relatively attractive spreads.  The Company attempts to
employ a fairly disciplined approach that allows for growth and
avoids, to the extent possible, having to compete as either a
risk absorber or a pure low-cost provider of funds.

The Company is primarily engaged in the business of originating
(or, in some cases, purchasing) leases, secured loans or
installment purchase agreements (collectively, "Financial
Contracts"), warehousing such Financial Contracts, and ultimately
securitizing (or, in some cases, selling outright) such Financial
Contracts.  In most cases, the Company does not, for accounting
purposes, realize the ultimate income associated with such
Financial Contracts until the time of sale or securitization;
and, accordingly, some of the variances in the year-to-year
revenue and net income figures in the statement of operations of
the Company are reflective of that fact.

The ability of the Company to generate net income is dependent on
a number of factors, including the following; (a) the volume of
originations of Financial Contracts ("Financial Contract
Volume"), (b) on a short-term basis, the net interest spread
between the cost of the warehouse facilities available to the
Company and the all-inclusive interest rate on the Financial
Contracts (the "Short-Term Interest Spread"); and on a long-term
basis, the difference between the implied rate or yield (after
factoring in various components such as expenses, required
reserves, subordination levels and the like) on the
securitizations sponsored by the Company and the weighted average
interest rate on the Financial Contracts sold into such
securitizations (the "Securitization Profit"), (c) the level of
delinquencies and defaults on the Financial Contracts originated
or purchased by the Company, and (d) the expenses incurred by the
Company in the operation of its business, including salaries,
commissions and other selling, general and administrative
expenses (collectively, "SG&A").

The ability of the Company to generate acceptable Financial
Contract Volume is, itself, dependent upon a number of factors,
including (i) the size, experience and expertise of its sales
staff, (ii) the availability of sufficient drawable amounts under
the Company's warehouse facilities to finance such Financial
Contract Volume, (iii) the reluctance of the Company to accept
unattractive credit risk in respect of a particular borrower or
borrowers, (iv) the necessity of such Financial Contracts to meet
the requirements and criteria of a securitization or other
funding source and (v) the competition in the financial market-
place to provide financing to customers (including competition
from commercial banks, finance companies and other suppliers of
capital).

The ability of the Company to maintain an acceptable level of
Short-Term Interest Spread and to generate an acceptable level of
Securitization Profit is, itself, dependent upon a variety of
factors and considerations, including (i) competition in the
financial market-place, (ii) the borrowing cost to the Company
under its warehouse facilities, and (iii) the all-in cost
associated with the securitization of the Financial Contracts
originated and sold into such securitization.

The ability of the Company to decrease or eliminate credit risk
(and, thus, write-offs and write-downs of the assets) is highly
dependent on an effective system (and the employment and
retention of adequate personnel to implement and monitor such
system) to review, analyze and assess both the credit quality of
the borrowers and the continuing residual value of the equipment
or other items which form the security for the Financial
Contract.  Although the securitization of a particular portfolio
of Financial Contracts generally relieves the Company from any on-
going liability (and, thus, the credit risk with respect to such
portfolio is assumed by the purchasers of the securities issued
in the securitization), any substantial decrease in the credit
quality of a previously-securitized portfolio will impact on the
ability of the Company to realize reserve fund amounts and would
probably impact on the ability of the Company to sell all of the
securities in future securitizations.

The ability of the Company to manage its expenses (including its
SG&A) is a major factor in determining profitability.  Any
decrease in such expenses must be balanced against the risk
associated with possible defections of key personnel and
inadequate staffing levels, particularly with respect to the
sales personnel.  The Company believes that some portion of the
relatively high level of SG&A is attributable to (i) the re-
focusing of its products lines, and (ii) the functional
equivalent of research-and-development with respect to new
products and services offered by the Company.

The Company's credit underwriting and risk management strategies
have historically proven to be effective, and the management of
the Company places a high emphasis on evaluating portfolio and
vendor risk and structuring programs that attempt to mitigate
risk.  Over the last six years, credit losses on the Financial
Contracts (as defined below) have consistently been nominal
relative to the portfolio average outstanding balances.  In
addition, the Company's residual realization experience has been
above-average by industry standards, which is largely
attributable to a focus on equipment that is modular, upgradeable
and manufactured by leading companies.  Operational and
administrative functions are centralized through a common
corporate support group.

Marketing and Sales Activities

Substantially all of the Financial Contracts are originated by
the Company through its own sales force of 14 persons.  The sales
force is divided into three groups: (a) Healthcare Finance Group
("HFG"), (b) Vendor Finance Group ("VFG"), and (c) Structured
Finance Group ("SFG").

HFG provides specialized retail financial services directly to
health providers and other end-users of medical equipment
(including hospitals, doctor groups and outpatient centers) and
is responsible for creating business opportunities within the
medical marketplace.

VFG provides private label vendor programs, specialized joint
ventures and captive financing company financial services to
national manufacturers, distributors, and niche originators, each
of whom directly or indirectly control the distribution of
equipment.  While it operates within the multi-billion dollar
equipment financing marketplace, VFG focuses on underserved and
inefficient niches within that market.  Such targeted niches
include (i) medical equipment manufacturers and distributors,
(ii) telecommunications equipment manufacturers, and (iii)
software manufacturers and system integrators.

SFG pursues credit-driven project financings and portfolio
acquisitions, and works with other equipment leasing companies,
selected equipment manufacturers, banks and finance companies.
SFG focuses on the following markets:  (i) gaming equipment lease
programs, (ii) lease funding and portfolio acquisition programs,
and (iii) energy market financings.

Lease Terms and Conditions

The Financial Contracts generally take the form of finance
leases, true or tax leases, and note and security agreements.
Substantially all of the Financial Contracts are non-cancelable,
"hell or high water", triple-net obligations of the lessee or
borrower.  Initial terms generally range from 12 to 120 months
from the date of commencement, with the majority of the Financial
Contracts historically having had an initial term of 48 months.
The Financial Contracts are generally secured by equipment and
other tangible assets.

The Company uses a master lease or loan agreement form, the terms
and conditions of which are sometimes modified to accommodate a
particular lease or loan transaction.  In substantially all
cases, the obligations are "triple net" leases or loans under
which the lessee or borrower is obligated to: (i) remit all rents
or loan payments regardless of the performance of the equipment,
(ii) operate the equipment in compliance with the manufacturer's
instruction manuals and governmental rules and regulations, (iii)
properly maintain and service the equipment, (iv) insure the
equipment against casualty loss and provide public liability
coverage for bodily injury and property damage, and (v) pay
directly (or reimburse the Company for) any property, use or
similar taxes associated with the equipment.

Under its master lease and loan agreements, in the event of a
default by a lessee or borrower, the Company can declare the
lease or loan in default and pursue its contractual remedies,
including repossession (or foreclosure of the security interest,
in the case of a loan) of the equipment.  The master lease and
loan agreements give the lessee or borrower the right to enforce
the warranties made by the equipment manufacturers and vendors.
The Company makes no representation or warranty to the lessee or
borrower regarding marketability, fitness for any purpose,
condition, quality, delivery or installation of the equipment.
The equipment is delivered from the supplier directly to the
lessee or borrower and, following the lessee or borrower's
acceptance of the equipment, the Company pays the purchase price
to the supplier.  In the case of leases, the Company maintains
title to the equipment throughout the lease term, while the case
of a loan, the Company maintains a lien and perfected security
interest in the equipment throughout the term of the loan.  A
lease may or may not provide for the renewal of the lease and/or
the purchase of the equipment at the end of the initial lease
term.

Types of Financial Contracts

1)  Finance Leases: This classification of a lease is actually
used to refer to three different types of lease structures.  They
generally share the essential characteristics whereby the lease
payments are structured to fully amortize the equipment cost over
the term of the lease; and the lessee effectively obtains
ownership of the equipment at lease maturity.

     a)  "Dollar Buy-Out Lease" - The most prevalent finance
lease is commonly referred to as a dollar buy-out lease, for it
requires the lessee to purchase the equipment for $1.00 (or some
other nominal amount) at the end of the original lease term.
Title to the equipment generally resides with a lessor during the
lease term, with the lessee obtaining ownership at lease
maturity.

     b)  "Put" or "Balloon" Lease - This is a common type of
finance lease under which the lessee agrees to purchase the
equipment covered by the lease, at the end of a lease term, for a
predetermined price.  The "put" or "balloon" may be in an amount
ranging from 5% of the original equipment cost to 40% or more of
the original equipment cost.  The "put" or "balloon" payment is
made as the last payment due under the lease term.  Title to the
equipment resides with the lessor during the lease term, with the
lessee obtaining ownership at lease maturity.

     c)  A lease may call for the lessee to have the option to
purchase the equipment at the then fair market value from (or
return the equipment to) the lessor at the end of the initial
lease term.  This type of lease may at times be categorized, for
accounting purposes, as either a finance lease or an operating
lease, as described below.  The categorization is dependent upon
current accounting regulations outlined in FASB #13 relative to
whether or not the mandatory lease payments amortize more or less
than 90% of the original equipment cost.  If 90% or more of the
original equipment cost is amortized by the mandatory lease
payments, then the lease will be categorized as a finance lease
for accounting purposes.  Title to the equipment will rest with
the lessor who will have the first lien and perfected security
interest in the equipment.  Title will be conveyed to the lessee
only upon negotiation of a final payment which will be determined
by then fair market value of the equipment.

2)  Operating Leases - This is the common version of the lease
which provides the lessee with the option, but not the
obligation, to purchase the equipment at the end of the initial
lease term at its fair market value.  As stated above, the
determination of whether a lease is an operating lease or a
finance lease is based upon current accounting conventions.  An
operating lease is one where the mandatory lease payments
amortize less than 90% of the original equipment cost.  Title to
the equipment will rest with the lessor who will have the first
lien and perfected security interest in the equipment.  Title
will be conveyed to the lessee only upon negotiation of a final
payment which will be determined by the then fair market value of
the equipment.

3)  Loan or Note and Security Agreement - The Company documents
certain transactions as loans with a note and security agreement
as the underlying documentation.  Loan agreements require the
full amortization of the equipment cost (generally the loan
principal balance) during the term of the agreement.  Loan
documentation requires that the rate of interest be disclosed to
the borrower.  Title to the equipment is held by the borrower,
with the lender having a perfected security interest in and lien
upon the equipment.

Type of Equipment Leased

The assets that Prime finances for its clients varies within the
following market niches.  Healthcare Finance Group primarily
finances medical devices used in the treatment of patients and
computer systems for the general operation of hospitals.  The
Structured Finance Group provides financing primarily for casino
and rout operators in the gaming industry as well as heating and
cooling equipment for energy management applications.  Slot
machines and other furniture & fixtures are the most common
assets included in the gaming contracts.  The heating and cooling
equipment is composed of boilers, chillers, and the specialized
computers needed for climate control and monitoring.  The Vendor
Services Group finances the assets manufactured or distributed by
its clients, including, without limitation, bone densitometers,
software for corporate applications, voice mail systems,
telephone systems and telephone switches.  The following table
summarizes the distribution of equipment type as a percentage of
the Aggregate Contract Value for the December 1996 and January
1996 securitizations:

                                         December     January
           Equipment Type                  1996        1996
           Medical                          28%         34%
           Computer                         21          19
           Gaming                           14          19
           Energy Management                 7          10
           Software                          2         < 1
           Furniture, Fixtures &                    
               Physician Practices          12           8
           Telecommunications                4           6
           Other                            12           3

The Company typically originates Financial Contracts that have an
original contract balance ranging from approximately $50,000 to
$5,000,000 or greater.

Customers

Since its inception, the Company has entered into financing
transactions with over 3,500 customers.  There is no significant
credit exposure with any one customer.  The Company conducts a
credit review of prospective customers through an examination of
their financial statements and credit history, and requests
audited financial statements annually in an effort to keep
current on each customer's financial status.  The Company does
not believe that the loss of any one customer would have a
material adverse impact on its operations.

Under vendor programs, the Company provides financing programs
with vendors, some exclusive some not, where the Company reviews
the strength of the vendor as well as the end user in relation to
making the credit decision.  Vendor programs generate repeat
business as the vendor provides financing for their customers.
Most of the vendor agreements (programs) include some form of
recourse to the vendor and/or remarketing agreements.

Employees

As of December 31, 1996, the Company had 52 employees, none of
whom were represented by a labor union.

Competition

The equipment leasing and related businesses of the Company are
highly competitive.  Many firms are engaged in the same types of
businesses as the Company, including (i) finance divisions,
affiliates and subsidiaries of equipment manufacturers, (ii)
banks, their affiliates or subsidiaries, several of which lend
funds to the Company, (iii) other leasing and finance companies,
(iv) companies and state agencies which sponsor tax-exempt
financing or other investor programs for the acquisition and
lease of equipment, and (v) independently formed partnerships of
individuals or corporations operated for the specific purpose of
leasing equipment.  Many of these organizations have greater
financial or other resources than the Company and, therefore, may
be able to obtain funds on terms more favorable than those
available to the Company.

The Company believes that its ability to compete effectively
depends to a great extent upon:  a) its knowledge of the
marketplace, b) the education, training and experience of its
personnel, c) the relationship and reputation it has established
for service and keeping its commitments with customers and
vendors, and d) its flexibility and adaptability to the special
needs of its institutional and technologically-oriented
customers.

Item 2.   PROPERTIES

The Company's leased corporate headquarters occupy approximately
14,500 square feet of space in an office building located in
Rosemont, Illinois (a suburb of Chicago) near O'Hare Airport. The
lease, which expired on December 31, 1996, has been extended
pursuant to a seven-year renewal.  Also, the Company exercised
its option to lease 4,900 square feet of additional space
contiguous with the existing space.  The Company also leases
sales offices in Duluth, Georgia, Albany, New York and Charlotte,
North Carolina.   Aggregate annual rent for these sales offices
is approximately $31,000.

Item 3.   LEGAL PROCEEDINGS

While the Company is subject, from time to time in the ordinary
course of its business, to legal actions and claims, it is not
now a party to any legal proceeding that could have material
adverse effect on the Company's financial position or results of
operations.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.



PART II

Item 5.   MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
          STOCKHOLDER MATTERS

(a)  Market Information

The Common Stock was traded on the NASDAQ National Market System
until July 23, 1992 at which time the Common Stock was removed
from the National Market System and began being traded in the
over-the-counter market primarily because it did not meet the
minimum bid price requirement of one dollar to continue to be
traded on the NASDAQ Bulletin Board.  On June 5, 1996, the Common
Stock once again began trading on the Nasdaq SmallCap Market tier
of the Nasdaq Stock Market under the symbol: PMCP.  The following
table summarizes the quarterly price range of the Common Stock
for 1996 and 1995.

                          1996                1995
                     High       Low      High       Low

        First       $4        $1 5/8    $1 3/8    $  5/8

        Second       6         3 1/2     1 3/4       5/8

        Third        6         4 3/4     2           5/8

        Fourth       6 1/4     4 3/4     2 1/4     1 1/4


     (b)  Holders

          As of December 31, 1996, there were approximately 413
          holders of record of common stock.

     c)   Dividends

          The Company has never paid a dividend on its Common
          Stock, and no dividends are contemplated in the
          foreseeable future.  Payment of dividends is within the
          discretion of the Company's Board of Directors.
          
Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS6.

General

The financial results of 1996 compared to 1995 were influenced by
a number of economic and strategic issues including: (i) over the
past several years the Company's healthcare market has changed
both in size and the type of financing required by the
marketplace, (ii) a securitization totaling $56,725,781 was
completed in March 1995, (iii) a securitization totaling
$85,273,476 was completed in January 1996, (iv) a securitization
totaling $66,322,341 was completed in December 1996, (v) in
October 1996, the company issued 25,000 shares of $100 par value
preferred stock with warrants to purchase 499,606 shares of
common stock and (vi) in October 1996 the company was issued $5
million of subordinated debenture notes.

On March 16, 1995, the Company issued and sold equipment lease-
backed pay-through notes with an initial aggregate contract value
of $56,725,781.  Through this issuance, the Company permanently
financed certain assets and liabilities carried on the Company's
balance sheet as of December 31, 1994.  These assets and
liabilities were removed from the consolidated balance sheets and
the resulting gain of approximately $2.1 million was recognized
on the Company's statement of operations in the first quarter of
1995.

On January 22, 1996, the Company issued and sold equipment lease-
backed pay-through notes with an initial aggregate contract value
of $85,273,476.  Through this issuance, the Company permanently
financed certain assets and liabilities carried on the Company's
balance sheet as of December 31, 1995.  These assets and
liabilities were removed from the balance sheet and the resulting
gain of approximately $4.2 million was recognized on the
Company's statement of operations in the first quarter of 1996.

On December 13, 1996, the Company issued and sold equipment lease-
backed pay-through notes with an initial aggregate contract value
of $66,322,341. The resulting gain of approximately $4.1 million
was recognized on the Company's statement of operations in the
last quarter of 1996.

On March 20, 1997, the Company issued and sold equipment lease-
backed pay-through notes with an initial aggregate contract value
of $77,476,378. While most of the securitized pool consists of
contracts originated during 1996, accounting rules require that
the gain realized by the Company from accounting for the
securitization as a sale be recognized in the first quarter of
1997.

The Company has historically profited from the value of the
equipment subject to leases upon termination of such leases at
initial maturity (the amount so realized is referred to herein as
"Residual Amounts").  The Residual Amounts are typically realized
from the sale or "re-lease" of the equipment to the original
lessee or, in some cases, from the sale of the equipment in the
open market or to the supplier or manufacturer.  In respect of a
sale of a Financial Contract to a third party, the Company
typically either sells or retains the Residual Amounts, depending
on the particular sale.  If the Residual Amounts are sold with
the Financial Contract, the Company and the purchaser negotiate
the price paid for the assumed Residual Amounts.  In the case of
a securitization, the Company in effect sells the Residual
Amounts for a pre-determined price and, to the extent that the
actual Residual Amounts realized from the sale or re-lease of the
equipment exceeds that which was assumed, the excess is deposited
in the reserve fund established in connection with the
securitization; and, subject to the rights of the holders of the
Securitization Notes to be paid from such funds, remitted to the
Company when all of the Securitization Notes have been paid in
full.

The Company attempts to conduct its business in a manner designed
to conserve its working capital and minimize its credit exposure.
The Company does not purchase equipment until: (i) it has
received a noncancelable lease from its customer, and (ii) it has
determined that the lease (a) can be discounted with a bank or
financial institution on a non-recourse basis, or (b) meets the
lease origination standards established for a securitized pool.

Financial Condition

The Company's financial condition continues to be dependent upon
certain critical elements.  First, the Company must be able to
obtain recourse and non-recourse financing to fund future
acquisitions and originations of Financial Contracts.  Second,
the Company must originate a sufficient volume of new business
which is structured and priced in such a way so as to permit the
Company to finance or sell those Financial Contracts for an
amount which, in the aggregate, covers the Company's cost of
operations, plus provides a return on stockholders' equity.  The
Company intends to utilize a combination of interim warehouse
borrowing and long-term funding methodologies to provide it with
borrowing and funding availability at market competitive rates of
interest.  The long-term funding methodologies will include: (i)
the continued issuance of asset-backed securities, (ii) portfolio
sales, (iii) program financings, and (iv) the discounting of
individual Financial Contracts.

Liquidity and Capital Resources

The Company utilizes amounts available under its warehouse
facilities to fund the origination of its Financial Contracts and
to carry such Financial Contracts until the date that they are
sold to a third party or securitized.  The Company has a number
of credit facilities at its disposal including warehouse
facilities that totaled approximately $66.4 million as of
December 31, 1996.  Amounts drawn and outstanding under these
facilities are primarily a function of the Financial Contract
volume generated prior to sale or securitization of such
Financial Contracts.  As of December 31, 1996, approximately
$46.3 million was outstanding under the warehouse facilities.

Permanent, long-term financing for the Company's originated
assets is provided through either non-recourse debt or
securitized asset sales.  The Company currently utilizes
approximately twenty institutional lenders to permanently finance
lease rentals on a non-recourse basis.  These financings are
collateralized solely by the leased equipment and related
rentals, and the Company has no recourse liability to these
lenders for repayment of debt in the event of a lessee default.
Typically, the proceeds of these borrowings exceed the Company's
investment in the leased equipment.  In the past, the Company has
been able to obtain adequate non-recourse funding commitments,
and the Company believes it will be able to do so in the future.

On October 4, 1996, Prime Capital Corporation raised additional
capital by completing a private sale of $5 million principal
amount of five year, 12.5% subordinated debentures and $2.5
million of 9% preferred stock to Banc One Capital Corporation
(BOCC), a subsidiary of Bank One Corporation, Columbus, Ohio.  In
addition, BOCC has agreed to purchase up to an additional $2.5
million of Prime Capital's five year, 12.5% subordinated
debentures during the next two years. As part of the transaction,
BOCC also received warrants to purchase up to 12% of Prime
Capital's common stock, depending on the total amount of
subordinated debentures purchased by BOCC.

The Company intends to continue to pursue a diversified strategy
of funding which will include: (i) periodic securitization of
aggregated pools of transactions; (ii) specific program financing
agreements; (iii) portfolio sales, and (iv) "one-off" sales of
selected transactions.  This strategy is focused upon maintaining
funding access, optimizing the cost of funds and enhancing the
Company's ability to be market/client responsive in specialized
transactions.

The Company believes that existing cash balances, cash flows from
its activities, available warehouse and permanent non-recourse
borrowings, and securitized asset sales will be sufficient to
meet its foreseeable financing needs, provided the Company is
able to originate a sufficient volume of transactions which meet
its credit quality and profitability standards.

The Securitization Process

Although the Company has historically sold some its Financial
Contracts outright to a third party, it believes that the "best
execution" for the ultimate disposition of the Financial
Contracts which it originates is the securitization process.
Since December, 1993, the Company has engaged in, and sponsored,
five separate securitizations (one in December, 1993, the second
in September, 1994, the third in March, 1995, the fourth in
January 1996, and the last in December 1996.)  The total initial
aggregate contract value of the Financial Contracts sold by the
Company into the last five securitizations has been $56,762,677,
$39,424,940, $56,725,781, $85,273,476, and 66,322,341
respectively.  Each of these securitizations has received "true
sale" treatment, and is treated as a sale for accounting
purposes.  Each securitization has resulted in the issuance by a
special-purpose, wholly-owned subsidiary of the Company of
equipment lease-backed pay-through notes (the "Securitization
Notes").  Securitization Notes have been non-recourse to the
Company.  Such Securitization Notes have generally been issued in
various classes, with various subordination levels, but in each
case, all of the Securitization Notes (including the class which
is the most subordinated) have been sold, and the Company has not
been required to purchase or take back any part of the
Securitization Notes.  While this fact is not necessarily unique
to the Company, it is frequently the case that companies in the
same business as, or similar businesses to, that of the Company
have been required, in connection with securitizations of their
lease or loan portfolios, to purchase or take back the most
subordinated class of securitization securities issued in
connection with such securitizations, as a result of the
perceived risk of such subordinated class.  The Company's ability
to avoid this risk is primarily the result of the credit quality
history of their Financial Contract portfolios.  Each issue of
Securitization Notes has been privately placed, rather than sold
publicly.

The price at which the Company has historically sold Financial
Contracts into each securitization is a function of a number of
factors and considerations, but - as a general matter - the
profit realized from such sale is the present value of the future
revenue stream on the Financial Contracts, at the weighted
average interest rate applicable to such Financial Contracts
(together with an assumed residual value of the equipment of
other items forming the security for the Financial Contracts),
less (i) the weighted average yield applicable to the
Securitization Notes, (ii) the expenses (including the private
placement fee) of issuance of the Securitization Notes, (iii) the
accrual of the servicing fees, and (iv) the establishment of
certain reserves.  Cash reserves of approximately 1% to 3% are
established at closing for the purpose of providing credit
support for the Securitization Notes, while GAAP accounting
reserves are established at .5%.  The approximate .5% to 2.5%
difference flows through the income statement and is recognized
as current earnings. Each reserve fund, represented by
"Restricted cash" on the Company's balance sheet, is increased
over the life of the Securitization Notes by excess interest
income on the Financial Contracts over the debt service
applicable to the Securitization Notes, by residual realizations
over those which were assumed at the time of the issuance of the
Securitization Notes, and by interest income on the reserve fund
itself.  The indentures of the various securitization pools have
unique stipulations regarding release of cash reserve funds,
however, in any event, cash reserves relating to all of the
securitization pools are released as such time as no notes remain
outstanding.

Other Contracts

While securitizations have been, since 1993, the prime exit
strategy for Financial Contracts originated by the Company, the
Company has in the past sold certain Financial Contracts (or
portfolios of Financial Contracts) directly to third parties, and
will continue to assess the viability of selling to third parties
in the future.  A direct sale of Financial Contracts to third
parties generally reduces or eliminates the need for any
substantial representations or warranties from the Company, and
generally may be accomplished without the need to establish any
reserve or similar funds.  In addition, such sales may frequently
be effected quickly and may provide a source of interim working
capital funds to the Company.  The market for such outright sales
to third parties is relatively deep and there are a number of
financial institutions (including banks and insurance companies)
which are currently involved in purchasing financial assets
similar to the Financial Contracts.

During the three-year period from January 1, 1994 through
December 31, 1996, the Company sold Financial Contracts to third
parties with an aggregate contract balance of $95,017,132 broken
down as follows:  $31,701,262 in 1996; $36,790,616 in 1995; and
$26,525,254 in 1994.  Total financings by the Company were
$183,297,079 in 1996, $93,516,397 in 1995, and $65,950,194 in
1994.

Results of Operations

The operating results of Prime Capital are affected by three
main, yet interrelated factors:  1.  The volume of Finance
Contract activations, 2.  the amount and frequency of Financial
Contract financings and 3. the level of operating expenditures
required to support the volume of Finance Contract activations
and financings.

Once a Financial Contract is activated, it is sold to a third
party or, in most cases, funded through a warehouse facility
until it is sold through securitization.  Sale of a contract to a
third party results in immediate fee income on that contract.
Warehousing a contract for a period of time results in increased
Rentals on Leased Equipment or Direct Finance Lease income and
correspondingly increased interest expense and, if the contract
is an operating lease, depreciation on leased equipment.  When
contracts are accumulated to a certain level and sold into
securitization, the company recognizes fee income from the gain
on securitization and ceases to recognizes Rental or Direct
Finance Lease Income, Interest Expense and Depreciation
associated with the sold contracts.  As with most of Prime's
securitizations to date, a securitization also triggers the
recognition of servicing fee income on the securitization pool
and interest income on cash reserve balances until all the
contracts in the pool have expired.

Prime's revenue results have consistently followed the above
trends. The volume of Financial Contract activations has
increased consistently over the past three years, an increase of
97% from 1994 to 1995 and an increase of 21% from 1995 to 1996.
As Financial Contract activation volume increased, so did
revenues from Rentals on leased equipment and Direct Financing
Leases.  The increased initial contract value of each of the four
securitization pools over the last three years resulted in
increased fee income from gains on securitization.  The
accumulation of five securitization pools has contributed, and
will continue to contribute, to an increase in interest income
realized on cash reserve balances and an increase in servicing
fee income on the securitization pools over the life of the
contracts securitized.

The above factors also contribute to the expenses of the Company.
Increased activations and increased warehouse balances over the
past three years caused an increase in interest expense and
depreciation on leased equipment.  The Sales force required to
generate the increased activation volume and the staffing
required to support and administer the increased activations and
financings have also required an increase in salaries and
benefits. Overall, the total number of employees has increased
from 44 at the end of 1994 and 1995 to 52 at the end of 1996.
Other selling, general and administrative expenses such as
brokers fees and commissions have increased directly from the
increase in volume; expenses related to office space,
telecommunications and information systems have been affected by
increased personnel and technological innovations.  Activation
volume and the increased number of securitization pools have also
had an upward pressure on associated legal, audit and accounting
expenses.

With a desire to expand further, in October of 1996 the company
issued $5 million of subordinated debt bonds and $2.5 million of
preferred stock with warrants to purchase common stock in order
to raise additional capital.  The bonds bear interest at 12.5%
and the preferred stock requires a 9% annual dividend.  While
1996 bore approximately 25% of the annual interest expense and
dividend allocation associated with these instruments due to the
date of the transaction, future years will be impacted to a
greater extent.  It is the intent of the Company that the
investment will provide opportunity to expand its revenue
capability to more than offset the expenses associated with the
increased interest and dividend requirements.

Revenue Trends - Three Years Ended December 31, 1996.  Revenues
were $17,481,773 in 1996, $7,038,063 in 1995, and $4,678,401 in
1994. The increase in revenue of $10.4 million, or 148%, in 1996
was largely attributable to (i) the private placement of two
separate securitizations in January 1996 and December 1996,
compared to one placement in March 1995 and (ii) an increase in
the volume of transactions activated (approximately $182 million
activated in 1996 versus approximately $150 million activated in
1995).   The $2.4 million, or 50%, increase in revenue in 1995
was largely attributable to (i) the gain on the March 1995
securitization, (ii) the permanent financing of individual
Financial Contracts, and (iii) an increase in the volume of
transactions activated (approximately $150 million activated in
1995 versus approximately $76 million activated in 1994).

Rental income increased by approximately $435,000, or 60%, in
1996 compared to 1995 due mainly to activating and carrying a
higher volume of operating leases.  There was a minimal increase
of $22,327, or 3%, in rentals on leased equipment in 1995.

Direct finance lease income increased approximately $2.1 million,
or 146%, from 1995 due mainly to an increase in the amount of
direct finance lease contracts activated and held during the
year.  Direct finance lease income increased $663,116 or 87% in
1995 for the same reason as the increase in 1996.

Fee Income increased by approximately $7.5 million, or 201%, in
1996 due mainly to the completion of $151,595,817 in Financial
Contract securitizations in 1996 compared to $56,725,781 in
Financial Contract securitizations in 1995.  Fee income increased
approximately $1.5 million, or 65%, in 1995.  This increase is
largely attributable to a higher gain on securitization
recognized in 1995 ($2.1 million) versus the gain on
securitization recognized in 1994 ($.6 million).

The gain on sale of leased equipment decreased $91,954, or 67%,
in 1996 from 1995 and by $139,295 or 50% in 1995. The reductions
in this income account are a result of a decrease in gains
realized from the remarketing of equipment on behalf of managed
investor programs. In the past, the company shared in gains on
remarketing of investor owned equipment after the investors
received a predetermined return.  The company reported gains from
these programs of approximately $280,000 in 1994, $137,000 in
1995 and none in 1996.  The reduction is a result of the
expiration of the remaining leases under these programs.

Interest income increased $328,873, or 45% in 1996 and $310,281
or 75% in 1995.  These increases are largely attributable to the
Company having higher invested cash balances each year due mainly
to required cash collateral reserves associated with Financial
Contract securitizations on which the company recognizes interest
income.

Expense Trends - Two Years Ended December 31, 1996

Expenses were $13,455,715 in 1996, an increase of approximately
$4.6 million, or 52% over 1995.  This increase is a result of (i)
increased selling, general and administrative expenses associated
with increased personnel and activation volume, (ii) increased
interest expense related to maintaining higher warehouse balances
of Financial Contracts, and (iii) increased depreciation expense
relating to leased equipment held and depreciated for a longer
period.  Expenses were $8,874,296 in 1995, an increase of 33%
from the expenses in 1994 of $6,676,405.  This increase is a
result of (i) increased selling, general and administrative
expenses associated with expanded marketing efforts (primarily
increased salaries and commissions), (ii) increased interest
expense associated with Financial Contract warehouse holding
periods and (iii) one-time non-recurring expenses, detailed
below.

Depreciation expense increased $290,614 or 92% in 1996 due mainly
to carrying a higher level of operating leases for a longer
period of time before securitization.  Depreciation expense
decreased $102,656 or 24% in 1995 due mainly to carrying lower
levels operating leases before securitization.

In 1996, selling, general and administrative expenses increased
approximately $2 million, or 27%.  Salaries and related benefits
increased approximately $500,000 or 17%, due mainly to increased
personnel (52 employees at the end of 1996 vs. 44 employees at
the end of 1995, an 18% increase).  Brokers fees, legal expense
and commissions expenses collectively increased by approximately
$1.6 million (92%) primarily due to a 96% increase in total
financings and a 21% increase in financial contract activations.
Partially offsetting the above increases was the effect of the
one-time non-recurring charges in 1995 of approximately
$1,050,000, as detailed below.

In 1995 selling, general and administrative expenses increased by
approximately $1.7 million, or 30%, over 1994 due mainly to one-
time non-recurring expenses relating to a write-off of prepaid
expenses totaling approximately $632,000 and the establishment of
a reserve related to certain pending tax audits totaling
approximately $418,000.  Also contributing were increased
expenses associated with increased Financial Contract
activations, primarily commissions.

In 1996, interest expense increased by $2.4 million (204%) over
1995 due to increased average warehouse balances resulting from
increased Financial Contract activation volume and longer holding
periods of Financial Contracts in warehouses before disposition.
For example, the majority of 1996 Financial Contract activations
were warehoused into December 1996, whereas in 1995, some of the
Financial Contracts activated were securitized in March 1995.
Also contributing to the increase was the accrual of $156,250 in
interest expense on the $5 million subordinated debt and the
amortization of fees associated with the transaction.

In 1995, interest expense increased by approximately $450,000
(60%) due mainly to holding Financial Contracts in the warehouse
for longer periods of time.  In 1995, Financial Contracts were
securitized in March and subsequent Financial Contract
activations were warehoused until securitization in January 1996.
In 1994, Financial Contract activations were securitized in
September.

Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following financial statements of the registrant and the
report thereon of KPMG Peat Marwick LLP are filed as part of this
annual report on Form 10-KSB:

Consolidated Balance Sheets - December 31, 1996 and 1995

Consolidated Statements of Operations - Years ended December 31,
1996, 1995 and 1994

Consolidated Statements of Stockholders' Equity - Years ended
December 31, 1996, 1995 and 1994

Consolidated Statements of Cash Flows - Years ended December 31,
1996, 1995 and 1994

Notes to Consolidated Financial Statements

Item 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES

Not applicable.

PART III

Item 9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE>
                   Directors of the Registrant
<CAPTION>
               Principal Occupation During Past           Director
Name           Five Years and Other Information     Age   since
<S>            <C>                                  <C>   <C>
James A.       President and Chief Executive         51     1978
Friedman       Officer of the Company or its
               predecessor since November 1978.
               
Leander W.     President of Jennings & Associates    68     1986
Jennings       since September 1986; Managing
               Partner, Chicago Office of KPMG
               Peat Marwick from January 1977 to
               February 1985; Director of A.O.
               Smith Corporation, Alberto Culver
               Corporation,  Fruit of the Loom
               Corporation and Teppco Partners
               L.P..
               
William D.     Chairman of The Quaker Oats           58     1986
Smithburg      Company since 1983 and Chief
               Executive Officer thereof since
               1981; Director of The Quaker Oats
               Company, Abbott Laboratories, The
               Northern Trust Corporation and
               Corning Glass Works.
               
Robert R.      Practicing Orthodontist and owner     47     1978
Youngquist     of Robert R. Youngquist D.D.S.,
D.D.S.         Ltd. during the past six years.
               
Mark P.        Senior Managing Partner of            49     1996
Bischoff       Bischoff, Maurides & Swabowski,
               Ltd. since 1988; Secretary of the
               Board of Directors and General
               Counsel of the Company since 1986.

</TABLE>

              Executive Officers of the Registrant
<TABLE>
<CAPTION>
                                                           
  Name of          Principal Occupation During Past      Age
  Officer          Five Years and Other Information
  <S>            <C>                                     <C>
  James A.       President and Chief Executive            51
  Friedman       Officer of the Company or its
                 predecessor since November 1978.
                 
  Robert C.      Senior Vice President of the Company     51
  Benson         since August 1995.  From 1983 to
                 1995 Senior Vice President and Chief
                 Financial Officer of various
                 financial services divisions of
                 Heller Financial, Inc..
                 
  Joseph         Senior Vice President of Operations      50
  Rinehart       of the Company since July 1996.
                 From 1992 to 1996 Vice President of
                 leasing and operations at StorageTek
                 Distributed Systems Division, Inc.
                 From 1988 to 1992 Director of Equity
                 for Meridian Leasing Corporation.
                 
  John           Senior Vice President of the Company     36
  Altergott      since January 1996.  Vice President
                 of the Healthcare Finance Group of
                 Prime Capital Corporation since
                 March 1988.
                 

</TABLE>

Item 10.-EXECUTIVE COMPENSATION AND OTHER INFORMATION

    The following table shows all the cash compensation paid or
    to be paid by the Company or any of its subsidiaries, as
    well as certain other compensation paid or accrued, during
    the fiscal years indicated, to the President and Chief
    Executive Officer, and the highest paid executive officer
    of the Company whose compensation was at least $100,000 for
    the last fiscal year in all capacities in which they
    served:
    
<TABLE>
                   SUMMARY COMPENSATION TABLE
<CAPTION>
                                        Long-Term Compensation      
                                                           Pay-     
                 Annual Compensation        Awards         outs
   (a)     (b)   (c)     (d)    (e)       (f)      (g)     (h)    (I)
                               Other                              All
                               Annual  Restricte                 Other
Name and                       Compen-     d               LTIP  Compen-
Principal       Salary  Bonus  sation    Stock    Option  Payou  sation
Position   Year  ($)     ($)    ($)    Award(s)     s       ts    ($)
                                          ($)     /SARs    ($)
<S>        <C>  <C>     <C>    <C>     <C>        <C>     <C>    <C>
James A.   1996 296,050         
Friedman   1995 288,000                 
President  1994 357,000        3,625
and Chief       
Executive       
Officer         
                                                                 
Robert C.  1996 109,720 20,100                     25,000
Benson          
Senior
Vice
President
                                                                 
John       1996 97,500 195,849                     50,000
Altergott       
Senior
Vice
President
</TABLE>

<TABLE>
                                
             Options/SAR Grants in Last Fiscal Year
                                
                        Individual Grants
<CAPTION>
       (a)              (b)             (c)         (d)        (e)
                     Number of                                   
                     Securities     % of Total                   
                     Underlying    Options/SARs  Exercise        
                    Options/SARs    Granted to    or Base        
                      Granted      Employees in    Price    Expiration
 Name                   (#)         Fiscal Year   ($/Sh)       Date
 <S>              <C>              <C>           <C>       <C>
 Robert C.             25,000                      $5.50   Aug.  9,
 Benson                                                    2006
                                                           
 Joseph Rinehart       50,000                       5.38   Jun. 24,
                                                           2006
                                                           
 John Altergott        50,000                       1.88   Jan.  3,
                                                           2006
</TABLE>

<TABLE>
     Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End
                       and  Option/SAR Values
<CAPTION>
    (a)          (b)          (c)            (d)              (e)
                                          Number of            
                                         Securities        Value of
                                         Underlying     Unexercised In-
                                         Unexercised       the-Money
                                        Options/SARs    Options/SARs at
                Shares                    at FY-End         FY-End
             Acquired on     Value           (#)              ($)
               Exercise     Realized    Exercisable/      Exercisable/
Name             (#)          ($)       Unexercisable    Unexercisable
<S>          <C>          <C>          <C>             <C>
Robert C.                                                               
Benson                                    8,250/41,750   $34,568/$70,182
                                                                        
John                                                                    
Altergott       2,000        $9,500      85,000/50,000 $435,325/$168,500
                                                                        
Joseph                                                                  
Rinehart                                      0/50,000             $0/$0

</TABLE>
Director's Compensation

Each Director of the Company who is not an Executive Officer
receives an annual retainer of $10,000 plus a fee of $500 for
attendance at each meeting of the Board.  In addition, members of
the Committees of the Board who are not Executive Officers
receive a fee of $300 for each Committee meeting attended.
Directors of the Company who are also Executive Officers receive
no compensation for rendering services as a Director except for
reimbursement of out-of-pocket expenses.

Compensation Pursuant to Plans

The Company adopted the 1984 Incentive Stock Option Plan (the
"ISO Plan"), the 1986 Non-Qualified Stock Option Plan (the "Non-
Qualified Plan") and the 1987 Stock Option Plan (the "1987
Plan").  All descriptions of the various plans are qualified in
their entirety by reference to the actual Plan documents which
are available for examination.

The ISO Plan is administered by a committee of not less than two
Directors of the Board (the "Committee").  The Board must select
the members of the Committee from among those Directors who are
ineligible to participate in, and who have not within the year
preceding appointment to the Committee been eligible to
participate in, the ISO Plan or any other stock option plan of
the Company.  The ISO Plan empowered the Committee to grant
incentive stock options to "key employees" of the Company and its
subsidiaries to purchase shares of the Company's Common Stock at
any time prior to the approval of the 1987 Plan.  Subject to
certain limitations, the ISO Plan empowered the Committee to
determine the persons to whom options were granted, the number of
shares to be covered by each option, the option price per share
(which must have been at least equal to 100% of the fair market
value of the Common Stock of the Company on the date the option
is granted) and all other terms and conditions of the option and
its exercise.  Termination of an optionee's employment with the
Company or its subsidiaries results in the termination of all
options held by such optionee which were not exercisable at the
time of such termination of employment.  All options granted
under the ISO Plan are non-assignable and non-transferable other
than by will or the laws of descent and distribution.

The Non-Qualified Plan empowered the Board of Directors for a
period of 10 years commencing on March 26, 1986, to grant non-
qualified stock options to purchase shares of the Company's
Common Stock to Directors of the Company who are not Officers or
employees of the Company or its subsidiaries and to key employees
who are not Directors of the Company.  The Non-Qualified Plan
provided for the issuance of up to 25,000 shares of Common Stock
upon the exercise of options thereunder at any time prior to the
approval of the 1987 Plan.  A Director participant could not be
granted options to purchase more than 7,500 shares of Common
Stock under the plan.  On March 26, 1986, the Board of Directors
delegated the responsibility for the administration of the Non-
Qualified Plan to the Committee.  Subject to the provisions of
the Non-Qualified Plan, the Committee determined the persons to
whom options are granted, the number of shares subject to each
option, the exercise price of each option and all other terms and
conditions of exercise.  Pursuant to an amendment adopted on May
1, 1986, options must have been granted at not less than 85% of
the current fair market value of the shares of Common Stock.
Each option granted under the Non-Qualified Plan was and is
immediately exercisable in full.  A portion of the shares
purchased upon exercise of an option granted under the Non-
Qualified Plan may, however, be subject to repurchase by the
Company at the option price if the optionee ceases to be an
employee or a Director, as the case may be, of the Company within
five years after the date of grant of the option.  Such
repurchase option lapses pro-rata over such period and lapses
entirely where certain transactions involving the Company have
occurred.  Options are not transferable, except that options may
be exercised by the executor, administrator or personal
representative of a deceased optionee for a period of not longer
than one year after the death of such optionee at such time and
to such extent that the optionee, had he lived, would have been
entitled to exercise such option.

The 1987 Plan was adopted by the Board of Directors on March 24,
1987 and was approved by the stockholders on May 27, 1987.  An
aggregate of 300,000 shares of the Company's Common Stock was
reserved for issuance pursuant to the exercise of options under
the 1987 Plan, 200,000 of which were transferred from the ISO
Plan and 15,000 of which were transferred from the Non-Qualified
Plan. On  August 31, 1994 the stockholders approved an additional
200,000 shares of the Company's Common Stock be reserved for
issuance pursuant to the exercise of options under the 1987 Plan.
In August 1996 the stockholders approved an additional 250,000
shares of the Company's Common Stock be reserved for issuance
pursuant to the exercise of options under the 1987 Plan.

The Board of Directors may grant options to purchase shares of
the Company's Common Stock at the times and prices provided for
in the agreements granting the options, subject to the terms of
the 1987 Plan, to key employees (who are not Directors of the
Company) and Directors (who are not Officers or employees of the
Company or its subsidiaries) of the Company or its subsidiaries.
Only key employees are eligible to receive incentive stock
options.  Key employees and Directors are eligible to receive non-
qualified options.  All options are subject to the specific terms
and conditions evidenced by written agreements between the
Company and the optionee.  The maximum number of shares for which
an option may be granted to any one key employee (who is not a
Director of the Company) is not limited other than in the
discretion of the Board.

An optionee may exercise options granted under the 1987 Plan for
a period of three months following, in the case of an optionee
who is an employee, termination of the optionee's employment (12
months if termination of employment is due to total and permanent
disability), or, in the case of an optionee who is a non-employee
Director, the time the optionee ceases to be a Director of the
Company (12 months if he ceases to be a Director due to total and
permanent disability) to the same extent that the optionee might
have exercised such option at the time of such termination of
employment or the time he ceased to be a Director, as the case
may be.  The Company shall have the right to repurchase certain
shares on termination of employment or directorship.  Options
shall not be transferable, except that options may be exercised
by the executor, administrator or personal representative of a
deceased optionee for a period of not longer than one year after
the death of such optionee at such time and to such extent that
the optionee, had he lived, would have been entitled to exercise
such option.

Item 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT

Current Ownership

The following table sets forth certain information as of December
31, 1996 with respect to the beneficial ownership of the
Company's Common Stock by each stockholder or group known by the
Company to be the beneficial owner of more than 5% of its
outstanding Common Stock, by each Director, and by all Executive
Officers and Directors as a group.  The information is based, in
part, on data furnished by such Executive Officers, Directors and
stockholders.  The address of each holder of more than 5% of the
Company's Common Stock other than First Financial Fund, Inc. and
Wellington Management Company is O'Hare International Center,
10275 West Higgins Road, Rosemont, Illinois  60018.  The address
for Wellington Management Company is 75 State Street, Boston,
Massachusetts 02109.  First Financial Fund, Inc.'s address is One
Seaport Plaza, 25th Floor, New York, New York  10292.

<TABLE>
<CAPTION>

Name of                      Amount and Nature
Beneficial Owner           of Beneficial Ownership  Percent of Class
<S>                             <C>                    <C>
James A. Friedman (1)            2,198,375               48.6%
Leander W. Jennings (2)             27,100                   *
Mark P. Bischoff                    10,000                   *
William D. Smithburg (2)            27,000                   *
Robert R. Youngquist, D.D.S. (3)    20,000                   *
Robert C. Benson (2)                 8,250                   *
John Altergott (2)                  92,000                2.0%

First Financial Fund, Inc. (4)     330,000                7.3%

All Executive Officers and
Directors as a group
(8 persons) (2)                  2,382,725               52.6%

<FN>_________________________
*Less than 1%

(1)  Includes 459,975.67 shares owned by a trust for the benefit
     of Mr. Friedman's children for which Mr. Friedman disclaims
     beneficial ownership.  The named trustee of the trust is
     Mark P. Bischoff.
(2)  Includes outstanding options which are currently exercisable
     with respect to the following named individuals or groups:
     Messrs.  Jennings, 25,000 shares; Smithburg, 25,000 shares;
     Benson, 8,250 shares; Altergott, 85,000 shares. All
     Executive Officers and Directors as a group, 143,250 shares.
(3)  Includes 15,000 shares held in a pension plan of which Dr.
     Youngquist is a fiduciary and for which Dr. Youngquist
     disclaims beneficial ownership.
(4)  According to Schedules 13G filed with the Securities and
     Exchange Commission on January 24, 1997, First Financial
     Fund, Inc., an investment Company, is the beneficial owner
     of such shares, and Wellington Management Company, its
     investment advisor, may also be deemed to be a beneficial
     owner of those shares.
</TABLE>

Item 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There are no family relationships among the Directors and
Executive Officers of the Company.

In September 1991, James A. Friedman purchased one lease and the
underlying telecommunications equipment from the Company for a
price of approximately $350,000, made up of cash and an
assumption of the debt secured by those assets.  The transaction
was approved by the Company's outside directors in accordance
with the Company's policy of related party transactions.  The
Company originally purchased the equipment for approximately
$456,000 and entered into this lease in February, 1990.  At the
date of the sale to Mr. Friedman, the assets were carried on the
Company's books at approximately $373,000.  There were no
proceeds received by Mr. Friedman on this lease in 1994.  $27,511
was received by Mr. Friedman in 1995 and $223,749 was received by
Mr. Friedman in 1996 on this transaction.

Item 13.       EXHIBITS AND REPORTS ON FORM 8-K

1.Financial Statements
The following financial statements of Prime Capital Corporation
and subsidiaries are filed as part of this annual report on Form
10-KSB:

                                                      Sequential
                                                        Page No.

 a) Independent Auditors' Report                            24

 b) Consolidated Balance Sheets as of
    December 31, 1996 and 1995                              25

 c) Consolidated Statements of Operations
    for the years ended December 31, 1996,
    1995 and 1994                                           26

 d) Consolidated Statements of Stockholders'
    Equity for the years ended
    December 31, 1996, 1995 and 1994                        27

 e) Consolidated Statements of Cash Flows
    for the years ended December 31, 1996,
    1995 and 1994                                           28

 f) Notes to Consolidated Financial Statements              29

 2.Exhibits
        The exhibits filed in response to Item 601 of
        Regulation S-B as part of this Annual Report on Form 10-
        KSB are listed in the Exhibit Index on pages 39 through
        40.

 3.Reports on Form 8-K
        There were no reports on Form 8-K filed by the Company
        during the fourth quarter of the Company's fiscal year
        ended December 31, 1996.

<PAGE>
                           INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders
Prime Capital Corporation:


We have audited the accompanying consolidated balance sheets of
Prime Capital Corporation and subsidiaries as of December 31,
1996 and 1995, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1996.  These
consolidated financial statements are the responsibility of the
Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.

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

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Prime Capital Corporation and subsidiaries at
December 31, 1996 and 1995, and the results of their operations
and their cash flows for each of the years in the three-year
period ended December 31, 1996 in conformity with generally
accepted accounting principles.



KPMG PEAT MARWICK LLP


Chicago, Illinois

March 10 , 1997



<PAGE>

<TABLE>                                                        
               PRIME CAPITAL CORPORATION AND SUBSIDIARIES                                 
                       Consolidated Balance Sheets                                        
<CAPTION>                                                      
                                                       December 31,         
                                                    1996           1995
<S>                                            <C>           <C>           
                    ASSETS                                     
Cash and cash equivalents                      $   7,063,398 $   2,001,949
Restricted cash                                    7,873,004     3,717,591
Receivables:                                                              
  Rentals on leased equipment                        172,758       100,589
  Due from equipment trusts                           46,948        38,068
  Securitization receivable, net loss reserves     1,851,433     1,643,891
  Other                                            5,369,399       829,204
Net investment in direct financing leases                                 
  and loans                                       56,004,417    58,561,185
Leased equipment, net of accumulated                                      
depreciation
  of $78,885 and $164,542 in 1996 and 1995                                
  respectively                                     1,370,289     2,581,032
Deposits on equipment                                134,487       114,836
Property and equipment, net of accumulated                                
  depreciation of $1,156,512 and $1,062,527                               
  in 1996 and 1995, respectively                     364,499       285,599
Other assets                                         761,317        80,482
    Total assets                               $  81,011,949 $  69,954,426
                                                                          
     LIABILITIES AND STOCKHOLDERS' EQUITY                                 
Notes payable                                  $  46,418,920 $  58,300,252
Accounts payable for equipment                     7,780,691     4,057,179
Accrued expenses and other liabilities             8,413,696     4,246,376
Deposits and advances                              4,341,351       563,711
Subordinated debt                                  5,000,000           ---
   Total Liabilities                              71,954,658    67,167,518
                                                                          
Stockholders' equity                                                      
Preferred stock, $100 par value: authorized                               
  250,000 shares, issued 25,000 shares in 1996     2,500,000           ---
Common stock, $0.05 par value:  authorized                                
  10,000,000 shares; issued 4,384,365 and                                 
  4,374,365 shares in 1996 and 1995,
  respectively                                       219,218       218,718
Additional paid-in capital                         9,480,675     9,681,225
Accumulated deficit                              (2,842,802)   (6,813,235)
Treasury stock, at cost; 94,200 shares                                    
  at December 31, 1996 and 1995                    (299,800)     (299,800)
    Total stockholders' equity                     9,057,291     2,786,908
                                                                          
    Total liabilities and stockholders' equity $  81,011,949 $  69,954,426
<FN>                                                                      
See accompanying notes to consolidated financial statements.             
</TABLE>                                                                  

<TABLE>

                PRIME CAPITAL CORPORATION AND SUBSIDIARIES
                                     
                  Consolidated Statements of Operations
                                     
<CAPTION>                                           
                                        Years Ended December 31,
                                                    
                                                               
                                   1996            1995            1994
<S>                            <C>              <C>            <C>
Revenues:                                                      
Rentals on leased equipment  $     1,158,419  $     723,265  $      700,938
Direct financing leases                                        
  and loans                        3,514,885      1,427,943         764,827
Fee income                        11,253,085      3,736,491       2,267,641
Gain on sale of leased                                         
  equipment                           45,599        137,553         276,848
Interest                           1,055,574        726,701         416,420
Other income                         454,211        286,110         251,727
  Total revenues                  17,481,773      7,038,063       4,678,401
                                                               
Expenses:                                                      
Amortization of deferred                                       
  finance costs                     --              --                4,357
Depreciation of leased                                         
  equipment                          607,795        317,181         419,837
Selling, general and                                           
  administrative                   9,572,687      7,531,351       5,785,905
Interest                           3,650,901      1,200,662         749,952
Net capitalized initial                                        
  direct costs                     (375,668)      (174,898)       (283,646)
  Total expenses                  13,455,715      8,874,296       6,676,405
                                                               
Income (loss) before income                                    
  taxes and dividends        $     4,026,058  $ (1,836,233)  $  (1,998,004)
Income tax expense                  --              --              --
                                                               
Net income (loss)            $     4,026,058  $ (1,836,233)  $  (1,998,004)
Preferred dividends                   55,625        --              --
                                                               
Net income (loss) available                                    
  to common shareholders     $     3,970,433  $ (1,836,233)  $  (1,998,004)
                                                               
Net income (loss) per                                          
  common share               $          0.85  $      (0.43)  $       (0.47)
                                                               
Number of common shares                                        
  and dilutive common                                          
  equivalent shares                                            
  outstanding                      4,668,962      4,280,165       4,280,165
                                                               
See accompanying notes to consolidated financial statements.

</TABLE>

<TABLE>
                             PRIME CAPITAL CORPORATION AND SUBSIDIARIES
                                                  
                           Consolidated Statement of Stockholders' Equity
                                                  
                            Years Ended December 31, 1996, 1995 and 1994
                                                  
                                                                                           
<CAPTION>                                                                                  
                                                  Additional                                 Total
Balance                    Preferred    Common     paid-in     Accumulated    Treasury    Shareholder
  at                         stock      stock      capital       Deficit       Stock         Equity
<S>                        <C>         <C>        <C>          <C>           <C>           <C>
December 31, 1993        $    --     $  218,718 $  9,681,225 $ (2,978,998) $ (299,800) $     6,621,145
                                                                                           
   Net Loss                                                    (1,998,004)                  (1,998,004)
                                                                                           
December 31, 1994        $    --     $  218,718 $  9,681,225 $ (4,977,002) $ (299,800) $     4,623,141
                                                                                           
   Net Loss                                                    (1,836,233)                  (1,836,233)
                                                                                           
December 31, 1995        $    --     $  218,718 $  9,681,225 $ (6,813,235) $ (299,800) $     2,786,908
                                                                                           
   Net Income                                                    4,026,058                    4,026,058
   Cash dividends -                                                                                    
     preferred                                                    (55,625)                     (55,625)
   Exercise of options                      500        2,163                                      2,663
   Issuance of preferred                                                                   
     stock and warrants    2,500,000               (202,713)                                  2,297,287
                                                                                           
December 31, 1996        $ 2,500,000 $  219,218 $  9,480,675 $ (2,842,802) $ (299,800) $     9,057,291
<FN>                                                                                       
See accompanying notes to consolidated financial statements.
</TABLE>

<TABLE>
                     PRIME CAPITAL CORPORATION AND SUBSIDIARIES
                                          
                       Consolidated Statements of Cash Flows
                                          
                                                                      
                                                 Years Ended December 31,
                                                             
<CAPTION>                                                             
                                            1996           1995            1994
<S>                                     <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                                 
Net income (loss)                     $     4,026,058 $  (1,836,233) $   (1,998,004)
Adjustments to reconcile net income                                   
  (loss) to net cash used in                                          
  operating activities:                                               
  Depreciation                                754,350        436,818         531,936
  Amortization of unearned income         (3,514,886)    (1,427,943)       (756,654)
  Amortization of deferred finance                                    
    costs on direct finance leases                                    
    and loans                                --             --                 4,356
  Amortization of debt financing fees          30,719       --              --
  Gain on securitization                  (8,281,078)    (2,054,114)       (632,459)
                                                                      
  Changes in assets and liabilities:                                  
    Rentals on leased equipment and                                   
      other receivables                   (4,819,906)        723,201       1,084,162
    Deferred charges                         (89,402)        351,236       (261,286)
    Other assets                          (4,380,867)    (1,311,568)     (1,864,686)
    Accrued expenses and other                                        
      liabilities                           4,167,320      2,250,375        (31,646)
    Due from equipment trusts                 (8,880)         30,541         122,366
                                                                      
Net cash used in operating activities    (12,116,572)    (2,837,687)     (3,801,915)
                                                                      
CASH FLOWS FROM INVESTING ACTIVITIES:                                 
Cost of equipment acquired for lease    (158,497,874)  (114,532,687)    (63,753,378)
Net proceeds from sale of assets              854,917        317,268         479,954
                                                                      
Net cash used in investing activities   (157,642,957)  (114,215,419)    (63,273,424)
                                                                      
CASH FLOWS FROM FINANCING ACTIVITIES:                                 
Proceeds from issuance of                                             
  subordinated debt                         5,000,000       --              --
Net proceeds from issuance of                                                
  preferred stock and warrants              2,297,287       --              --
Proceeds from exercise of options               2,663       --              --
Payment of debt financing fees              (608,143)       --              --
Preferred stock dividends                    (55,625)       --              --
Discounted lease proceeds and                                                
  proceeds from sale of fully                                         
  leveraged finance leases and loans       50,936,717     35,932,007      22,810,629
Proceeds from (reduction in)                                          
  notes payable, net                     (11,881,332)     50,410,749       6,797,244
Proceeds from securitization,                                         
  net of expenses                         129,129,411     30,766,946      35,352,740
                                                                      
Net cash provided by                                                  
  financing activities                    174,820,978    117,109,702      64,960,613
                                                                      
Increase (decrease) in cash and                                       
  cash equivalents                          5,061,449         56,596     (2,114,726)
                                                                      
Cash and cash equivalents:                                            
  Beginning of year                         2,001,949      1,945,353       4,060,079
  End of year                         $     7,063,398 $    2,001,949 $     1,945,353
                                                                      
Cash paid during the year for:                                        
  Interest                            $     3,030,240 $    1,225,401 $       732,618
                                                                      
Supplemental schedule of noncash                                      
  financing activities:                                               
  Discounted lease rentals on direct                                  
    finance leases collected by                                       
    financial institutions            $      --       $     --       $       168,920
                                                                      
<FN>                                                                  
See accompanying notes to consolidated financial statements.

</TABLE>

(1)  Summary of Significant Accounting Policies

     Prime Capital Corporation, through its wholly-owned
     subsidiaries, is engaged principally in providing financial
     services to clients and customers throughout the United
     States.  The Company's primary focus is on providing
     specialty and high value-added financial products that are
     targeted to specific markets through its three Business
     Units.  The Company is primarily engaged in the business of
     originating (or, in some cases, purchasing) leases, secured
     loans or installment purchase agreements (collectively,
     "Financial Contracts"), warehousing such Financial
     Contracts, and ultimately securitizing (or, in some cases,
     selling outright) such Financial Contracts.   The
     accompanying consolidated financial statements include the
     accounts of Prime Capital Corporation and its wholly-owned
     subsidiaries, Prime Leasing, Inc., Prime Finance Corporation
     1993-A, Prime Finance Corporation 1994-A, Prime Finance
     Corporation 1995-A and Prime Finance Corporation 1996-A.
     All material intercompany transactions have been eliminated.

     (a)  Use of Estimates

     The preparation of financial statements in conformity with
     generally accepted accounting principles requires management
     to make estimates and assumptions that affect the reported
     amounts of assets and liabilities and disclosure of
     contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues
     and expenses during the reporting period.  Actual results
     could differ from those estimates.

          (b)  Revenue Recognition

     Completed lease contracts which qualify as direct financing
     leases or loans, as defined by Statement of Financial
     Accounting Standards (SFAS) No. 13, are accounted for by
     recording on the consolidated balance sheet the total
     minimum lease payments receivable, plus the estimated
     unguaranteed residual value of the leased equipment, less
     the unearned income.  The unearned lease income represents
     the excess of the total minimum lease payments, plus the
     estimated residual expected to be realized at the end of the
     lease term, over the cost of the related equipment.
     Unearned lease income is recognized as revenue over the term
     of the lease as a constant percentage interest return on the
     net investment.  The initial direct costs are capitalized as
     part of the net investment in direct financing leases and
     amortized over the lease term as a reduction in yield.

     The cost of equipment acquired for the Company's lease
     transactions that qualify as operating leases, as defined by
     SFAS No. 13, is recorded as leased equipment and depreciated
     on a straight-line basis to an estimated residual value at
     lease termination.  Lease revenue consists of periodic
     rentals.  Initial direct costs of originating operating
     leases are capitalized and amortized on a straight-line
     basis over the lease term.

     Fee income is generated from the sale of equipment and
     receivables.  The Company records as fee income from the
     sale of equipment the difference between the net sales
     proceeds received and the book value of equipment.  When the
     sale of contract receivables occurs, the net proceeds on the
     sale less the net book value of the sold receivables is
     recorded as fee income.

          (c)  Cash and Cash Equivalents

     Cash and cash equivalents are generally comprised of highly
     liquid instruments with original maturities of 90 days or
     less.
     
          (d)  Restricted Cash
     
     In connection with each Securitization completed by the
     Company, certain cash reserves are set aside for credit
     enhancement of the securitization pools.  These reserve
     balances are classified as restricted cash on the company's
     consolidated balance sheets.  Cash reserve accounts are
     initially funded from the proceeds received from the
     securitization and are increased by the excess spread
     realized from the receipt of payments from borrowers or
     lessees over the interest payment due to the securitization
     bondholders.  In the event of default or delinquency by a
     borrower or lessee, payments to the bondholders are disbursed
     from the cash reserve fund.  Typically, the cash reserve
     funds become available as unrestricted cash to the Company
     once all contracts in the securitization pool are paid in
     full, however, payout is sometimes sooner depending upon the
     specific pool indenture agreement.

          (e)  Income Taxes

     The Company uses the asset and liability method to account
     for income taxes.  Deferred tax assets and liabilities are
     recognized for the future tax consequences attributable to
     differences between the financial statement carrying amounts
     of existing assets and liabilities and their respective tax
     basis.  The measurement of deferred tax assets is reduced,
     if necessary, by a valuation allowance for any tax benefits
     of which future realization is uncertain.
     
     (f)  Net Income (Loss) per Common Share

     Net income/(loss) per common share is computed by dividing
     net income/(loss) after deduction of preferred stock
     dividends by the weighted average number of common and
     common equivalent shares outstanding during each period.
     Stock options are not included in the number of common and
     common equivalent shares for the years ended December 31,
     1995 and 1994 because they were not dilutive. The number of
     common and common equivalent shares used in the computation
     of net income/(loss) per common share for the years ended
     December 31, 1996, 1995 and 1994 was 4,668,962, 4,280,165,
     and 4,280,165 respectively.

     (g)  Financial Instruments

     The carrying value of the Company's financial instruments
     approximates their fair value.

     (h)  Stock Based Compensation
     
     The Company uses the intrinsic value based method of
     accounting for its stock-based compensation arrangements.
     
     (i)  Reclassifications
     
     Certain 1995 and 1994 amounts have been reclassified to
     conform with the 1996 presentation.

(2)  Net Investment in Direct Financing Leases and Loans

     The components of the net investment in direct financing
     leases and loans as of December 31 are as follows:
     
     <TABLE>
     <CAPTION>                              1996         1995
     <S>                                <C>          <C>
     Minimum lease/loan payments                                  
       receivable                         73,784,482   $72,778,029
                                                                  
     Estimated unguaranteed residual
       value of leased equipment             231,961       449,810
                                                                  
     Capitalized initial direct costs         22,875        63,784
                                                                  
     Unearned income                    (18,024,901)  (14,720,438)
                                                                  
     Allowance for uncollectible                                  
       accounts                             (10,000)      (10,000)
     Net investment in direct                                     
       financing leases and loans        $56,004,417   $58,561,185
     
     </TABLE>
     The estimated unguaranteed residual value of leased
     equipment at December 31, 1996 and 1995 includes residuals
     of $72,388 and $83,698, respectively, recorded from residual
     sharing agreements with investor programs and other third
     parties.
     
     Minimum lease and loan payments to be received on direct
     financing leases and loans in each of the next five years
     and beyond are as follows:
     <TABLE>
               <S>                    <C>
               Year ending            
               December 31,           
               1997                     $17,325,013
               1998                      14,678,894
               1999                      15,365,869
               2000                      13,727,358
               2001                       8,449,822
               Thereafter                 4,237,526
               Minimum lease and      
                 loan payments
                 to be received         $73,784,482
</TABLE>

     Leased equipment in the Company's portfolio consists
     primarily of medical, telecommunication and other  equipment
     with average 46-month lease terms, for which estimated
     residual values of 5% to 25% have been assigned.  The
     following table summarizes the estimated unguaranteed
     residual value on direct financing leases by year of lease
     termination:

<TABLE>
               <S>                     <C>
               Year ending             
               December 31,            
               1997                      $72,388
               1998                           --
               1999                           --
               2000                      102,727
               2001                       48,809
               2002                        8,037
                                                
               Total                    $231,961
</TABLE>
(3)  Notes Payable

     Notes payable at December 31, 1996 and 1995 includes
     $46,282,960 and $58,030,594, respectively, representing
     amounts borrowed under warehouse lines used to finance the
     Company's purchase of certain equipment on lease.
     Outstanding borrowings under the warehouse lines are secured
     by the related equipment.  The various warehouse lines bear
     different interest rates and maturities.  Also included in
     notes payable at December 31, 1996 and 1995 is a note and
     security agreement bearing interest at 9% due November 10,
     1998 with outstanding balances of $135,960 and $269,658,
     respectively.

(4)  Securitizations

     On September 19, 1994, the Company completed an asset
     securitization pursuant to which a wholly-owned, newly-
     formed, limited-purpose subsidiary of the Company issued two
     classes of receivables-backed, pay-through notes secured by
     the Company's entire interest in the pooled assets.  The
     initial aggregate contract value of the securitization was
     $39,424,940.  The Company established its own allowance for
     expected losses under its recourse obligations to
     Noteholders based on its historical loss experience and
     management's best estimate of future losses equal to one-
     half of one percent (0.5%) of the initial equipment cost.
     For financial reporting purposes, the asset securitization
     was treated as a sale and a gain of $632,459 was recognized
     as fee income in the accompanying consolidated
     financial statements.

     On March 16, 1995, the Company issued and sold equipment
     lease-backed pay-through notes with an initial aggregate
     contract value of $56,725,781.  Through this issuance of
     such notes, the Company permanently financed certain assets
     and liabilities carried on the Company's consolidated
     balance sheet as of December 31, 1994.  These assets and
     liabilities were removed from the consolidated balance
     sheets and the resulting gain was recognized on the
     Company's consolidated statement of operations in the first
     quarter of 1995.  The Company established its own allowance
     for expected losses under its recourse obligations to the
     Noteholders based on its historical loss experience and
     management's best estimate of future losses equal to one-
     half of one percent (0.5%) of the initial equipment cost.
     For financial reporting purposes, the asset securitization
     was treated as a sale and a gain of $2,054,114 was recognized
     as fee income in the accompanying consolidated
     financial statements.
     
     On January 22, 1996, the Company issued and sold equipment
     lease-backed pay-through notes with an initial aggregate
     contract value of $85,273,476.  Through the issuance of such
     notes, the Company permanently financed certain assets and
     liabilities carried on the Company's consolidated balance
     sheet as of December 31, 1995.  These assets and liabilities
     were removed from the consolidated balance sheet and the
     resulting gain, for financial reporting purposes, of
     $4,199,789 was recognized as fee income on the Company's
     consolidated statement of operations in the first quarter of 1996.
     The Company established its own allowance for expected losses
     under its recourse obligations to the Noteholders based on
     its historical loss experience and management's best
     estimate of future losses equal to one-half of one percent
     (0.5%) of the initial equipment cost.
     
     On December 13, 1996, the Company completed an asset
     securitization pursuant to which a wholly-owned, newly-
     formed, limited-purpose subsidiary of the Company issued
     four classes of receivables-backed, pay-through notes with
     an aggregate contract value of $66,322,341, secured by the
     Company's entire interest in the pooled assets.  The Company
     established its own allowance for expected losses under its
     recourse obligations to Noteholders based on its historical
     loss experience and management's best estimate of future
     losses equal to one-half of one percent (0.5%) of the
     initial equipment cost.  For financial reporting purposes,
     the asset securitization was treated as a sale and a gain of
     $4,081,289 has been included in fee income in the
     accompanying consolidated financial statements.
     
(5)  Subordinated Debt and Preferred Stock with Warrants
     
     On October 4, 1996, Prime Capital Corporation received
     $7,500,000 cash and incurred approximately $800,000 in
     expenses, in exchange for a $5 million principal amount of
     five year, 12.5% subordinated debentures and 25,000 shares
     of $100 par value 9% Dividend Preferred Stock with warrants
     to purchase 499,606 shares of the Company's common stock at
     $1.00 per share.  Expenses related to the transaction were
     allocated between the subordinated debt, preferred stock and
     warrants based upon their fair value.  Expenses allocated to
     the subordinated debt were capitalized and are being
     amortized over five years.  The unamortized balance of these
     expenses were included in "Other assets" on the Company's
     consolidated balance sheet at December 31, 1996 and the 1996
     amortization of $30,719 is included in interest expense on
     the Company's consolidated statement of operations.  The
     warrants are exercisable in March 1998.

(6)  Income Taxes

     The Company's net income tax provision after consideration
     of the tax effect from utilization of net operating loss
     carryforwards was zero for the years ended December 31,
     1996, 1995  and 1994.

     The reported income tax expense differs from the "expected"
     tax expense (benefit) (computed by applying the Federal
     corporate tax rate to the income before income taxes) as
     follows:
     <TABLE>
      <CAPTION>                  1996        1995        1994
      <S>                     <C>         <C>         <C>
      Computed "expected"                             
        tax expense (benefit) $1,368,860   ($624,320)   ($679,321)
                                                                     
      State income tax
         expense (benefit)
         net of Federal                                         
         income tax expense      201,411    (89,130)    (97,550)
         
                                                                
      Other - net                 14,571      12,111       9,282
                                                                
      Net operating loss
       carryforward
       (utilized) unused                                        
       benefit                (1,584,842)     701,339     767,589
                                      
      Total Expense              ---         ---         ---
     </TABLE>
     Deferred tax assets and liabilities at December 31, 1996 and
1995 include:
<TABLE>
     <CAPTION>                          1996            1995
     <S>                            <C>             <C>
     Deferred Tax Assets:
     
     Net operating and passive                                  
       activity loss carryforwards    $9,344,056      $8,407,937
                                                                
     Investment tax credit                                      
       carryforward                      614,361         645,307
                                                                
     Financial statement reserves
       not currently deductible
       for tax purposes                  324,331         341,779
                                                                
     Gross deferred tax assets        10,282,748       9,395,023
                                                                
     Less:  Valuation allowance      (5,296,678)     (6,901,753)
                                                                
     Total deferred tax assets         4,986,070       2,493,270
                                                                
     Deferred Tax Liabilities:                                  
     Difference in securitization                               
      accounting for tax
      purposes and financial                                    
      statement purposes               4,694,228       2,209,253
                                                                
     Other, net                          291,842         284,017
                                                                
     Total deferred tax                                         
      liabilities                      4,986,070       2,493,270
                                                                
     Net deferred taxes               $      ---      $      ---
</TABLE>

     Included at January 1, 1996 were valuation allowances of
     $6,901,753.  During fiscal 1996, the valuation allowance
     decreased by $1,605,075 due primarily to the deferred gains
     on the new securitizations:  Prime Finance Corporation 1995-
     A and Prime Finance Corporation 1996-A.

     The Company has $614,361 of unused investment tax credit
     carryforwards that are available for consolidated tax return
     purposes which expire at various times between 1997 and
     2001.  At December 31, 1996, the Company had a passive
     activity loss carryforward of approximately $18,903,976 and
     a net operating loss carryforward of approximately
     $5,055,000 available for tax return purposes.  The passive
     activity loss carryforward does not expire, and must be used
     before the Company's net operating loss carryforward to
     offset income from future business activities of the
     Company.  The net operating loss carryforward expires in the
     following manner: $1,878,000 in 2001, $1,238,000 in 2002,
     $1,215,000 in 2003, $102,000 in 2004, $5,000 in 2005,
     $575,000 in 2006, $15,000 in 2007, $8,000 in 2008, $9,000 in
     2009,  $5,000 in 2010 and $5,000 in 2011.

(7)  Commitments and Contingencies

     The Company rents office space and equipment under various
     operating lease agreements expiring during the next seven
     years.  The following is a schedule of future minimum rental
     payments required under these leases and does not include
     the Company's proportionate share of future real estate
     taxes and building operating expenses.
<TABLE>
                    <CAPTION>      
                    Year ending    
                    December 31,   Amount
                    <S>            <C>
                    1997           $339,680
                    1998            204,089
                    1999            213,807
                    2000            223,526
                    2001            233,244
                    2002            242,963
                    2003            252,681
</TABLE>
     Rent expense, including the Company's proportionate share of
     real estate taxes and building operating expenses, for the
     years ended December 31, 1996, 1995, and 1994 was $294,656,
     $282,513, and $283,777 respectively.
     
     During 1995 and 1996, the Company established itself as a
     credit facility for several major east coast hospital
     networks with major projects to expand their integrated
     health care delivery systems.  The projects totaled over
     $190 million and will be funded over the next three to four
     years.  As of December 31, 1996, approximately $40 million
     has been drawn on these credit facilities and the Company
     has a commitment to finance the approximate remaining $150
     million in the future.  The management of the Company feels
     confident that funding for these credit facilities will be
     obtained throughout the normal course of business.


(8)  Stock Option Plans

     In 1987, the Company adopted the 1987 Stock Option Plan
     ("Plan") under which certain employees and Directors of the
     Company may be granted the right to purchase shares of
     common stock at its fair market value on the date of grant.
     The Company has authorized an aggregate of 750,000 shares of
     common stock for issuance under the Plan.
     
     The Company applies APB Opinion No. 25 and related
     Interpretations in accounting for the Plan.  Accordingly, no
     compensation cost has been recognized for options granted
     under the Plan.  Had compensation cost for the Company's
     Plan been determined consistent with FASB Statement No. 123,
     the Company's net income (loss) and net income (loss) per
     common share would have been reduced to the pro forma
     amounts indicated below:
     <TABLE>
     <CAPTION>                            1996         1995
     <S>                   <C>         <C>         <C>
                                                               
     Net Income (loss)     As Reported $3,970,433  $(1,836,233)
     available to common
     shareholders          Pro Forma   $3,712,230  $(1,859,826)
                                                               
                                                               
     Net Income (loss)     As Reported       $.85        $(.43)
       per common share
                           Pro Forma         $.80        $(.43)
                                                               
</TABLE>
     The fair value of each option grant is estimated on the date
     of grant using the Black-Scholes option-pricing model with
     the following weighted-average assumptions used for grants
     in 1996 and 1995, respectively:  dividend yield of 0% for
     both years; expected volatility of 78% and 109%; risk-free
     interest rates of 6.12% and 6.56%; and expected lives of 5
     years for both 1996 and 1995.  Additional adjustments were
     made regarding a 5.5% estimated forfeit rate on the grants
     for the years following 1996.

     A summary of the status of the Company's Stock Option Plan
     as of December 31, 1996, 1995 and 1994 and changes during
     the years ended on those dates is presented below:
     
<TABLE>
    <CAPTION>            Weigh              Weigh            Weigh
                           t-                t-                t-
                           ed                ed                ed
                Shares   Aver-    Shares    Aver-   Shares   Aver-
                          age                age              age
                         Exer-              Exer-            Exer-
                          cise              cise              cise
                         Price              Price            Price
    <S>        <C>       <C>    <C>         <C>    <C>       <C>
    Shares                                                   
    under
    option at
    beginning                                                      
    of year     336,094  $1.28    356,162  $1.39   274,662   $1.24
                           
    Options                                                        
    granted     289,500  $4.37     85,000  $1.17    94,500   $1.67
                           
    Options                                                        
    expired    (24,094)  $10.59   (18,568) $1.03        --      --
                          
    Options                                                        
    termin-                                                        
    ated       (18,000)  $1.25    (86,500)  $1.67  (13,000)  $ .27
               
    Options                                                        
    exercised  (10,000)  $ .27        --     --        --      --
              
    Shares                                                         
    under
    option
    at end                                                         
    of year     573,500  $2.47     336,094  $1.28   356,162   $1.39
                           
    Options                                                        
    exercis-
    able at
    year-end    236,150  $ .39     237,428  $1.33   214,831   $1.44
                            
    Weighted                                                       
    average
    fair
    value of                                                       
    options
    granted                                                        
    during                                                 
    the year      $2.59               $.96              n/a
     </TABLE>
     
The following table summarizes information about stock
     options outstanding at December 31, 1996:
     <TABLE>
     <CAPTION>                                         
                        
                    Options Outstanding             Options
                                                  Exercisable
                                                        
                         Weighted                       
                         -average  Weighted             Weighted
     Range of            remain-   -average             -average
     exercise  Number    ing       exercise   Number    exercise
     prices    of        contrac-  price      of        price
               shares    tual                 shares
                         life
     <S>       <C>       <C>       <C>        <C>       <C>
                                                        
     $ .01 -   291,500   5.06      $   .55    236,150   $  .39
     $1.50               years                          
     
     $1.51 -     57,000  9.02      $ 1.86     --        --
     $3.00               years                          

     $3.01 -   --        --        --         --        --
     $4.50                                              

     $4.51 -   225,000   9.71      $ 5.11     --        --
     $6.00               years
                                                        
     Total     573,500   7.28      $ 2.47     236,150   $  .39
                         years
</TABLE>
(9)  Employee Benefit Plan

     During 1985, the Company established a defined contribution
     benefit plan under Internal Revenue Code (the "Code")
     section 401(a) with a cash deferred benefit arrangement
     under section 401(k) of the Code.  The plan covers all
     employees.  Contributions to the plan are based on
     percentages of employee contributions plus discretionary
     contributions determined annually by the Board of Directors.
     Contributions of approximately $39,000 were made in 1994 for
     participants in the plan.  There were no contributions made
     in 1995 or 1996.
     
(10)      Subsequent Event (unaudited)

     The Company closed a securitization with an initial
     aggregate contract value of $77,476,378 on March 20, 1997.
     While most of the securitized pool consists of contracts
     originated during 1996, accounting rules require that the
     gain realized by the Company from accounting for the
     securitization as a sale be recognized in the first quarter
     of 1997.

                          EXHIBIT INDEX
                                
                    PRIME CAPITAL CORPORATION

Copies of the following documents are filed herewith as exhibits:
<TABLE>
<CAPTION>
 Exhibit                                                   Sequential
   No.    Description                                        Page No.
<S>       <C>
          
3.1       Certificate of Incorporation                          *
3.2       By-Laws                                               **
10.1      Sublease dated October 8, 1985 between
          the Dow Chemical Company and Registrant               *
10.2      1984 Incentive Stock Option Plan of Registrant        *
10.3      1986 Non-Qualified Stock Option Plan of Registrant
10.13     Master Lease Agreements of Registrant                 *
10.13(a)  Revised Master Lease Agreements of Registrant         ****
10.15     Stock Restriction Agreement dated July 2, 1985
          between Registrant and Marvin T. Keeling              *
10.23     Form of Equipment Bill of Sale and Assignment
          contracts used in equipment sale-lease assignment
          transactions between Registrant and each of
          James A. Friedman, Marvin T. Keeling,
          Robert Youngquist, Thomas W. Heimsoth
          and Allen M. Olinger, III                             *
10.48     Bill of Sale of Lease to James Friedman               *****
21        Subsidiaries of Registrant                            39
23        Consent of KPMG PEAT MARWICK LLP                      40
27        Financial Data Schedule                               ***
          
</TABLE>
* Incorporated by reference to the Company's Registration
Statement on Form S-1, effective May 29, 1986, in which each
Exhibit had the same number as herein.

** Exhibit 3.2 is incorporated by reference to the Company's
Proxy Statement, effective April 29, 1987.

***  Incorporated by reference to the Company's electronic filing
of the December 31, 1996 10 KSB as filed on March 26, 1997.

**** Incorporated by reference to the Company's Annual Report on
Form 10-K as filed on May 10, 1991.

***** Incorporated by reference to the Company's Annual Report on
Form 10-K.  For the years ended December 31, 1991 as filed on
August 28, 1992 and amended on Form 8 filed on October 20, 1992.

Exhibits 21 and 23 have been included herein.


SIGNATURES

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



                                              PRIME CAPITAL
                                               CORPORATION
                                              (Registrant)



Date:  March 26, 1997                     /S/ James A. Friedman
                                         James A. Friedman
                                         President, Chairman and
Chief                                    Executive Officer


Pursuant to the requirements of 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 indicated on
this 26 day of March, 1997.

       Signature                                  Title


 /s/ James A. Friedman                   President, Chairman, and
                                         Chief Executive Officer
James A. Friedman                         (Principal Executive
                                           Officer)


 /s/ Robert C. Benson                    Chief Financial Officer
Robert C. Benson                          (Principal Financial
                                           Officer)


Directors


 /s/ James A. Friedman                   /s/ William D. Smithburg
James A. Friedman                        William D. Smithburg


 /s/ Mark Bischoff                       /s/ Robert R. Youngquist
Mark Bischoff                            Robert R. Youngquist


/s/ Leander W. Jennings
Leander W. Jennings




SIGNATURES

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



                                         PRIME CAPITAL
                                         CORPORATION
                                         (Registrant)



Date:  March 25, 1997
                                         James A. Friedman
                                         President, Chairman and
Chief Executive Officer



Pursuant to the requirements of 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 indicated on
this 25th day of March, 1997.

       Signature                                  Title




James A. Friedman                          Chairman, President,
(Principal Executive Officer)               Director and Chief
                                             Executive Officer



      Robert C. Benson                   Chief Financial
(Principal Financial Officer)              Officer


Directors

      James A. Friedman                     William D. Smithburg



      Mark P. Bischoff                      Robert R. Youngquist


       Leander W. Jennings