SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              --------------------



                                    FORM 10-Q

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



                For the quarterly period ending December 31, 1997
                                                -----------------

                         Commission File Number 0-19799
                                                -------


                       PILGRIM AMERICA CAPITAL CORPORATION
                       -----------------------------------

             (Exact name of Registrant as specified in its charter)

           Delaware                                      86-0670679
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)





             40 North Central Avenue, Suite 1200, Phoenix, AZ 85004
             ------------------------------------------------------
             (Address of principal executive offices)    (Zip Code)

         Registrant telephone number, including area code (602) 417-8100
                                                         ---------------

Indicate by check mark whether the Registrant (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 s 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 [ ]

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the last practicable date.


        3,861,330 Shares of Common Stock outstanding on January 31, 1998
        ----------------------------------------------------------------
<PAGE>
                                      INDEX


PART I.  FINANCIAL INFORMATION                                              Page
                                                                            ----

     Item 1.   Financial Statements


               (a)    Condensed Consolidated Financial Statements.............3


               (b)    Notes to Condensed Consolidated Financial Statements....6


     Item 2.   Management's Discussion and Analysis of Financial 
               Condition and Results of Operations............................8


PART II.  OTHER INFORMATION


     Item 6.   Exhibits and Reports on Form 8-K..............................11


     Signatures..............................................................12
                                       2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS


PILGRIM AMERICA CAPITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                           December 31,   September 30,
                                                                               1997           1997
------------------------------------------------------------------------------------------------------
                                                                                          
<S>                                                                        <C>                   <C>     
Assets                                                                                         
    Cash and cash equivalents                                              $       519    $        219
    Investments                                                                  6,648           3,127
    Accounts receivable                                                            424             458
    Notes receivable                                                             3,990           3,976
    Costs assigned to management contracts acquired, less                                      
         accumulated amortization of $3,555 and $3,233                          28,707          29,030
    Furniture, fixtures and equipment, less accumulated                                        
         depreciation of $412 and $370                                             691             532
    Deferred taxes                                                               5,355           6,420
    Deferred acquisition costs, less accumulated amortization                                  
          of $1,190 and $772                                                     9,277           5,891
    Other assets                                                                 1,668             994
                                                                           -----------    ------------
Total assets                                                               $    57,279    $     50,647
                                                                           ===========    ============
------------------------------------------------------------------------------------------------------
                                                                                               
Liabilities and stockholders' equity                                                           
Liabilities:                                                                                   
    Net liabilities of discontinued operations                             $       448    $        230
    Notes payable                                                                9,825           5,475
    Accrued compensation                                                         1,417           1,285
    Accounts payable and accrued expenses                                        2,336           1,904
                                                                           -----------    ------------
                Total liabilities                                               14,026           8,894
                                                                           -----------    ------------
                                                                                               
                                                                                               
Stockholders' equity:                                                                          
    Common stock, $.01 par value, 10,000,000  shares authorized, 5,384,060                     
         shares issued,  with 3,866,330 shares outstanding                          54              54
    Less:  Treasury stock, 1,517,730 shares                                     (8,623)         (8,623)
    Additional paid-in capital                                                  48,795          48,795
    Unrealized gain on investments, net of tax                                     371             538
    Retained earnings                                                            2,656             989
                                                                           -----------    ------------
                 Total stockholders' equity                                     43,253          41,753
                                                                           -----------    ------------
Total liabilities and stockholders' equity                                 $    57,279    $     50,647
                                                                           ===========    ============
------------------------------------------------------------------------------------------------------
</TABLE>                                                                   

See accompanying notes to condensed consolidated financial statements.
                                                   3
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)

                                                          Three Months Ended
                                                             December 31,
--------------------------------------------------------------------------------
                                                         1997            1996
--------------------------------------------------------------------------------


Revenues
    Management and administrative fees                $    5,724      $    3,930
    Distribution fees                                      1,135             466
    Investment and other income                              698             264
                                                      ----------      ----------
                Total revenues                             7,557           4,660
                                                      ----------      ----------
--------------------------------------------------------------------------------

Expenses
    General and administrative                             2,312           1,923
    Selling                                                1,600           1,245
    Amortization and depreciation                            799             527
                                                      ----------      ----------
                Total expenses                             4,711           3,695
                                                      ----------      ----------

    Earnings before  income taxes                          2,846             965

    Income taxes                                           1,178            --
                                                      ----------      ----------



Net earnings                                          $    1,668      $      965
                                                      ==========      ==========
--------------------------------------------------------------------------------

Earnings per Common and
Common Equivalent Share

Basic:
Net earnings                                          $     0.43      $     0.25
                                                      ==========      ==========

Shares used in per share calculation                   3,866,330       3,860,130
                                                      ==========      ==========

Diluted:
Net earnings                                          $     0.38      $     0.25
                                                      ==========      ==========

Shares used in per share calculation                   4,390,372       3,907,871
                                                      ==========      ==========
--------------------------------------------------------------------------------

See accompanying notes to condensed consolidated financial statements.
                                       4
<PAGE>
PILGRIM AMERICA CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)

<TABLE>
<CAPTION>
                                                                                   For the Three Months
                                                                                    Ended December 31,
-------------------------------------------------------------------------------------------------------
                                                                                   1997           1996
-------------------------------------------------------------------------------------------------------

<S>                                                                              <C>            <C>    
Cash flows from operating activities
Net earnings                                                                     $ 1,668        $   965
Adjustments to reconcile net earnings to net cash
    used in operating activities:
    Amortization and depreciation                                                    799            527
    (Increase) decrease  in accounts receivable                                       16            (33)
    Increase in deferred acquisition costs due to subscriptions                   (3,895)          (906)
    Decrease in deferred acquisition costs due to redemptions                         75             33
    Decrease in deferred tax asset                                                 1,178           --
    Increase (decrease) in operating liabilities                                     564         (3,240)
    Increase  in other operating assets                                             (674)          (175)
                                                                                 -------        -------
Net cash used in operating activities                                               (269)        (2,829)
                                                                                 -------        -------
-------------------------------------------------------------------------------------------------------

Cash flows from investing activities
    Investment in Pilgrim America Funds                                               (9)           (34)
    Sale of Pilgrim America Funds                                                    961           --
    Other investments purchased                                                   (4,750)          --
    Sales of furniture, fixtures and equipment                                         4              8
    Purchases of furniture, fixtures and equipment                                  (205)           (12)
    Cash provided by discontinued operations                                         218            273
                                                                                 -------        -------
Net cash provided by (used in) investing activities                               (3,781)           235
                                                                                 -------        -------
-------------------------------------------------------------------------------------------------------

Cash flows from financing activities
    Term debt borrowing                                                            4,350          2,550
                                                                                 -------        -------
    Net cash provided by financing activities                                      4,350          2,550
                                                                                 -------        -------
    Net  increase (decrease)  in cash and cash equivalents                           300            (44)
    Cash and cash equivalents, beginning of period                                   219            238
                                                                                 -------        -------
Cash and cash equivalents, end of period                                         $   519        $   194
                                                                                 =======        =======
-------------------------------------------------------------------------------------------------------

Supplemental disclosures
    Interest paid                                                                $    78        $    51

-------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to condensed consolidated financial statements.
                                                   5
<PAGE>
                       PILGRIM AMERICA CAPITAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(1)  BASIS OF FINANCIAL STATEMENT PRESENTATION

         Principles of Consolidation.  The accompanying  condensed  consolidated
financial statements of Pilgrim America Capital Corporation (the "Company") were
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Rule 10-01 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.  In the opinion of management,  all adjustments considered
necessary for fair  presentation  have been included.  Operating results for the
three  months  ended  December 31, 1997 are not  necessarily  indicative  of the
results which may be expected for the fiscal year ending September 30, 1998. For
additional  information,  refer to the consolidated financial statements for the
fiscal year ended  September 30, 1997 which are included in the  Company's  Form
10-K.

         The condensed  consolidated  financial statements include the Company's
wholly  owned  subsidiary,   Pilgrim  America  Group,  Inc.  ("PAG")  and  PAG's
subsidiaries, Pilgrim America Investments, Inc. ("PAI"), a registered investment
advisor,   and  Pilgrim  America   Securities,   Inc.   ("PAS"),   a  registered
broker/dealer  (collectively  "Pilgrim  America").  The  condensed  consolidated
financial  statements also include the Company's  wholly-owned  mortgage banking
subsidiaries,  Express America TC, Inc., EAMC Liquidation Corp.,  ("EAMC"),  and
EAMC's  wholly-owned  subsidiaries,   Wesav  Investment  Corporation  and  Wesav
Investment Inc.-2.

         The activities of the Company consist primarily of providing investment
management and related  services to various  open-end and closed-end  investment
companies  operating  under the Pilgrim and Pilgrim America names (the "Funds").
The results of  operations  reported  in the  condensed  consolidated  financial
statements reflect these investment management activities.

         Reclassifications.  Certain  reclassifications  have been made to prior
period financial statements to conform with current period presentation.

         Costs  Assigned to Management  Contracts  Acquired.  Costs  assigned to
management  contracts  acquired  represents  the fair  value  of the  investment
management  rights  acquired  through the  Acquisition  and also  represents the
excess of the purchase price (including liabilities assumed) over the fair value
of net assets acquired and resulting costs from the  Acquisition.  These amounts
are being amortized on a straight-line basis over 25 years.

         The Company  analyzes costs assigned to management  contracts  acquired
periodically  to determine  whether any impairment in value has occurred.  Based
upon  anticipated  future income from  operations,  in the opinion of management
there has been no impairment.
                                       6
<PAGE>
                       PILGRIM AMERICA CAPITAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



            Deferred  Acquisition  Costs.  The Company pays commissions of up to
4.0% to authorized  broker-dealers  at the time that Fund shares with contingent
deferred sales charges are sold.  These payments are  capitalized  and amortized
over a six-year period, which is the period during which the contingent deferred
sales charge is effective.

         The Company  periodically  analyzes the  recoverability of its Deferred
Acquisition  Costs by comparison  of the carrying  amount of the net future cash
flows to be received. If necessary, a valuation allowance is recorded to reflect
the difference between the carrying amount and the estimated future cash flows.

         Net  Earnings  Per Common  Share.  The  Company  implemented  Financial
Accounting  Standard ("FAS") No. 128 "Earnings per Share" for the quarter ending
December 31, 1997. This statement  provides  accounting and reporting  standards
for earnings per share (EPS),  simplifies the requirement  for calculating  EPS,
and is  compatible  with  international  accounting  standards.  This  statement
replaces the  presentation  of primary EPS with a presentation of basic EPS. The
statement  requires dual  presentation of basic and diluted EPS by entities with
complex  capital  structures.  Basic EPS includes no dilution and is computed by
dividing income available to common  stockholders by the weighted average number
of common shares outstanding for the period.  Diluted EPS reflects the potential
dilution of securities  that could share in the earnings of any entity,  similar
to fully diluted EPS.

Prior periods EPS have been restated to conform with the requirements of FAS No.
128.

The following table is an illustration of the  reconciliation  of the numerators
and  denominators  of the basic and diluted EPS  computations of the Company for
the quarters ended December 31, 1997 and 1996:

                                      Income         Shares       Per Share
December 31, 1997                   (Numerator)   (Denominator)    Amount
---------------------------------   -----------   -------------   ---------
Net earnings                        $1,668,000

Basic EPS
Earnings available to
   common stockholders               1,668,000      3,866,330      $  0.43
                                                                  =========

Effect of Dilutive Securities
Stock Options                             --          524,042
                                    -----------   -------------
Diluted EPS
Earnings available to
   common stockholders              $1,668,000      4,390,372      $  0.38
                                    ===========   =============   =========
                                       7
<PAGE>
                       PILGRIM AMERICA CAPITAL CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


December 31, 1996
---------------------------------
Net earnings                        $  965,000 

Basic EPS
Earnings available to
   common stockholders                 965,000      3,860,130      $  0.25
                                                                  =========

Effect of Dilutive Securities
Stock Options                             --
                                                       47,741
                                    -----------   -------------

Diluted EPS
Earnings available to
   common stockholders              $  965,000      3,907,871      $  0.25
                                    ===========   =============   =========

         Private  Account  Management  Fee On  November  15,  1997,  the Company
entered  into a  transaction  with a  non-issuer  to manage  approximately  $509
million of assets ("Private Account"). The Company earns 0.50% management fee on
these assets, and the Company may be entitled to an additional  performance fee.
The Company has recorded the fees earned from this Private Account in management
and administrative fees. As part of the transaction,  the Company has acquired a
$5 million equity investment in the Private Account.


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

General

         The  Company  is a  holding  company  that,  through  its  wholly-owned
subsidiaries,  provides  investment  management  and related  services for seven
open-end and one closed-end  funds (each a "Fund" and  collectively the "Pilgrim
America Funds" or the "Funds").

Results of Operations

         The following table presents comparative  quarterly data regarding Fund
assets under  management and Fund sales for the four quarters ended December 31,
1997:
                                       8
<PAGE>
<TABLE>
<CAPTION>
                                                             Pilgrim America Funds
                                                               Selected Fund Data
                                                                   ($000,000)
                                         -------------------------------------------------------------
                                         December 31,    September 30,     June 30,        March 31,
                                           1997(1)           1997            1997            1997
                                         -------------   -------------   -------------   -------------
<S>                                       <C>             <C>             <C>             <C>       
Open-End Funds:
    Beginning Assets                      $    676.0      $    600.0      $    515.5      $    462.6
    Direct Sales                               175.1            66.3            60.4            74.0
    Direct Redemptions                         (62.9)          (22.0)          (30.8)          (16.6)
    Exchanges In (Out)(2)                       (1.0)            5.9            (1.1)            0.4
    Investment Activities (3)                  366.1            25.8            56.0            (4.9)
                                         -------------   -------------   -------------   -------------
    Ending Assets                            1,153.3           676.0           600.0           515.5

Closed-End Funds:
    Beginning Assets                         1,702.0         1,688.9         1,622.5         1,274.0
    Investment Activities (3)                 (248.2)           13.1            66.4           348.5
                                         -------------   -------------   -------------   -------------
    Ending Assets                            1,453.8         1,702.0         1,688.9         1,622.5

Private Accounts:
    Beginning Assets                           230.5          --              --              --
    Sales                                      356.8           230.5          --              --
    Investment Activities (3)                 --              --              --              --
                                         -------------   -------------   -------------   -------------
    Ending Assets                              587.3           230.5          --              --
Ending Assets Under
    Management                            $  3,194.4      $  2,608.5      $  2,288.9      $  2,138.0
                                         =============   =============   =============   =============
</TABLE>

(1)  The Board of  Directors of Pilgrim  America  Bank and Thrift Fund  approved
     converting the Fund from a closed-end fund to an open-end fund at a meeting
     on October 16, 1997.
(2)  Net Exchanges from (to) the Company's sponsored money market fund.
(3)  Investment Activities include net investment income,  realized gain/(loss),
     change  in   appreciation/depreciation   and  net  cash   distributions  to
     shareholders.  Investment  Activities for  closed-end  funds include assets
     acquired using borrowed funds.


Quarter Ended December 31, 1997 compared to the Quarter Ended December 31, 1996

         Net  earnings  for the  December  31,  1997  quarter  amounted  to $1.7
million, or $0.38 per share compared to a net earnings of $965,000, or $0.25 per
share for the quarter ended December 31, 1996.

         Revenues.  Revenues for the December 31, 1997 quarter increased by $2.9
million over revenues for the December 31, 1996 quarter. This increase primarily
resulted from an increase in management and administrative fees of $1.8 million.
Management and  administrative  fees are based on assets under  management which
averaged $2.94 billion  during the current  quarter and $1.85 billion during the
December 31, 1996 quarter.

         In addition,  the conversion of the Bank and Thrift Fund to an open-end
Fund in October  1997,  along with  higher  sales of open-end  funds  during the
current  quarter as compared to the  December  31, 1996  quarter  resulted in an
increase in distribution  fees of $669,000.  Distribution fees are realized from
the sale of certain fund shares.
                                       9
<PAGE>
         Expenses. Total general and administrative and selling expenses for the
current quarter increased by $744,000 compared to the December 31, 1997 quarter.
This  increase in expense was  primarily  the result of an increase in personnel
costs primarily resulting from an increase in staff.

         Amortization  and depreciation  expenses  increased by $272,000 between
the two  quarters  primarily as a result of an increase in the  amortization  of
deferred  acquisition costs.  Deferred acquisition costs are commissions paid on
the sale of certain fund shares. These commissions are capitalized and amortized
over a six-year period.

Liquidity

         The  Company's  principal  liquidity  needs  arise in  connection  with
general and administrative  expense and selling expenses,  including commissions
paid by the  Company  in  connection  with  shares of its funds.  The  Company's
principal  liquidity and capital resources include cash flow from the operations
and  borrowings  available  under a credit  agreement.  In the first  quarter of
Fiscal  1998,  the  Company  had net cash flows used in  operating  activity  of
$269,000,  net cash flows used in investing activities of $3.7 million, of which
the Company's  discontinued  operations provided $218,000, and had cash provided
by financing activities of $4.4 million.

         The   Company,   through  its  wholly   owned   discontinued   mortgage
subsidiaries,  owns mortgage  loans and  foreclosed  real estate.  The Company's
investments  in these  loans and  foreclosed  real  estate are  funded  with the
Company's  working  capital and  borrowings.  Any  increase in  repurchase  loan
activity due to the Company's discontinued operations, beyond that forecasted by
the Company, may have an adverse effect on the Company's liquidity.

         The Company  intends to  continue  funding  its  investment  management
operations with cash provided by operations and with borrowings under its Credit
Agreement. The Company's credit agreement allows the Company or PAG to borrow up
to $25 million to be used for various purposes including:  (i) general corporate
working capital;  (ii)  acquisition of investment  management  contracts;  (iii)
financing of  commissions  paid by the Company in connection  with sales of Fund
shares  subject to a  contingent  deferred  sales  charge and (iv)  repurchasing
Company stock. The agreement contains  restrictive  convenants which require PAG
and the Company to maintain certain financial ratios and prohibits  "restrictive
payments"  (including  dividends  and other  payments)  from PAG to the Company.
Borrowings under the credit agreement are  collateralized  by assets of PAG, PAS
and PAI and  guaranteed  by the Company.  At December 31, 1997,  the Company had
borrowings  of  approximately  $  9.8  million   outstanding  under  the  Credit
Agreement, and approximately $15.2 million additional borrowings were available.

         On  August  5,  1997,  the  Company's   Board  of  Directors   approved
repurchasing up to an additional 500,000 shares of its common stock from time to
time in open  market  transactions.  As of  January  30,  1998 the  Company  has
repurchased 5,000 shares, under such authorization.
                                       10
<PAGE>
                           PART II - OTHER INFORMATION


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Exhibits

         27.0     Financial Data Schedules

(b)      Reports on Form 8-K.

         None
                                       11
<PAGE>
                                   SIGNATURES




         Pursuant to the  requirements of Section 13 of the Securities  Exchange
Act of 1934,  the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.




                                   PILGRIM AMERICA CAPITAL CORPORATION



Date:  February 10, 1998           /s/ James R. Reis
                                   ---------------------------------------------
                                   James R. Reis
                                   Vice-Chairman and Chief Financial Officer
                                   (Principle Accounting Officer)
                                       12