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

                          SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C. 20549

                                       -------

                                      FORM 10-Q


               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                           SECURITIES EXCHANGE ACT OF 1934


                       FOR THE QUARTER ENDED SEPTEMBER 30, 1998

                            COMMISSION FILE NUMBER 0-27190


                           PARAMOUNT FINANCIAL CORPORATION
                (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)



                  DELAWARE                             11-3072768
       (STATE OR OTHER JURISDICTION OF              (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)             IDENTIFICATION NO.)
       

           ONE JERICHO PLAZA, JERICHO, NEW YORK          11753
         (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)     (ZIP CODE)


                                    (516) 938-3400
                 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


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


                  NUMBER OF SHARES OUTSTANDING AT NOVEMBER 11, 1998:

             2,160,000 SHARES OF COMMON STOCK, PAR VALUE $0.04 PER SHARE.

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


     <PAGE>

                           PARAMOUNT FINANCIAL CORPORATION

                       INDEX TO FORM 10-Q FOR THE QUARTER ENDED

                                  SEPTEMBER 30, 1998





          PART I - FINANCIAL INFORMATION                           Page No.
                                                                   --------

          Item 1 - Financial Statements

                     Consolidated Balance Sheets
                     September 30, 1998 and December 31, 1997 . . . .   1

                     Consolidated Statements of Operations
                     Three Months Ended and Nine Months Ended
                     September 30, 1998 and 1997  . . . . . . . . . .   2

                     Consolidated Statement of Changes in 
                     Stockholders' Equity Nine Months Ended
                     September 30, 1998 . . . . . . . . . . . . . . .   3

                     Consolidated Statements of Cash 
                     Flows Nine Months Ended September 30,
                     1998 and 1997  . . . . . . . . . . . . . . . . .   4

                     Notes to Unaudited Consolidated
                     Financial Statements . . . . . . . . . . . . . .  5

          Item 2 - Management's Discussion and Analysis
                   of Financial Condition and Results of
                   Operations . . . . . . . . . . . . . . . . . . . .  6-9


          PART II - Other Information . . . . . . . . . . . . . . . .  10


          SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . .  11



     <PAGE>

                            PART I:  FINANCIAL INFORMATION

          ITEM 1.   FINANCIAL STATEMENTS

                   PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------------

                             CONSOLIDATED BALANCE SHEETS
                             ---------------------------

                                               DECEMBER 31,  SEPTEMBER 30,
                          ASSETS                   1997         1998
                          ------               ------------  -------------
                                                              (UNAUDITED)

          Cash and cash equivalents . . . . .   $ 2,209,649  $ 3,181,405

          Investments available for sale  . .     3,524,456           --

          Accounts receivable . . . . . . . .     1,138,479    1,955,340

          Net investment in direct finance and
            sales-type leases . . . . . . . .    39,941,764   32,841,631

          Assets held under operating leases,
            net of accumulated depreciation .     5,459,895    7,028,351

          Deferred income taxes . . . . . . .            --      410,540

          Other assets  . . . . . . . . . . .       788,218    2,102,384
                                                -----------  -----------

          Total assets  . . . . . . . . . . .   $53,062,461  $47,519,651
                                                ===========  ===========


               LIABILITIES AND SHAREHOLDERS' EQUITY
               ------------------------------------

          Notes payable . . . . . . . . . . .   $ 2,656,365   $ 4,236,402

          Accounts payable  . . . . . . . . .     1,307,496     1,205,652

          Accounts payable - leases . . . . .       708,568        58,791

          Accrued expenses  . . . . . . . . .       383,097       438,523

          Obligations for financed equipment -
            non-recourse  . . . . . . . . . .    40,287,404    34,675,921

          Deferred income taxes . . . . . . .        73,848            --
                                                -----------  ------------

          Total liabilities . . . . . . . . .    45,416,778    40,615,289
                                                -----------  ------------
          Shareholders' equity:

          Preferred stock, $.01 par value;
            5,000,000 shares authorized, none
            outstanding   . . . . . . . . . .            --            --

          Common stock, $.04 par value;
            17,500,000 shares authorized, and
            2,160,000 shares issued and
            outstanding . . . . . . . . . . .        79,900        86,400

          Additional paid-in capital  . . . .    13,644,228    14,456,728

          Stock subscription receivable . . .            --      (812,500)

          Accumulated deficit . . . . . . . .    (6,049,080)   (6,775,661)

          Treasury stock, 12,500 and 24,500         (29,365)      (50,605)
            shares at cost, respectively, . .   -----------  ------------

          Total shareholders' equity  . . . .     7,645,683     6,904,362
                                                -----------  ------------

          Total liabilities and shareholders'   $53,062,461   $47,519,651
            equity  . . . . . . . . . . . . .   ===========  ============


                   See accompanying notes to financial statements.


                                       -1-
     <PAGE>

                   PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------------

                        CONSOLIDATED STATEMENTS OF OPERATIONS
                        -------------------------------------

                                      UNAUDITED
                                      ---------



                            THREE MONTHS ENDED         NINE MONTHS ENDED
                               SEPTEMBER 30,              SEPTEMBER 30,
                          -----------------------   ------------------------

                              1997        1998          1997         1998
                              ----        ----          ----         ----
          REVENUES:

          Sales . . . . . $13,364,035  $9,568,454   $20,114,906  $26,062,031

          Lease revenue .   2,764,898   1,877,703     8,188,263    5,524,102

          Fee, interest
            and other
            income  . . .      76,800     113,375       857,764      573,000
                          -----------  ----------   -----------  -----------

              Total
               revenues .  16,205,733  11,559,532    29,160,933   32,159,133
                          -----------  ----------   -----------  -----------


          COSTS AND EXPENSES:

          Cost of sales .  12,775,064   8,912,328    18,808,375   24,309,658

          Lease expense .   2,679,478   1,844,557     7,870,158    5,310,222

          Selling,  
           general and
           administrative
           expenses . . .   1,118,006   1,520,687     2,605,548    3,695,361
                          -----------  ----------   -----------  -----------

              Total 
               costs and
               expenses .  16,572,548  12,277,572    29,284,081   33,315,241
                          -----------  ----------   -----------  -----------

          Income (loss)
            before provision
            (benefit) for 
            income taxes.    (366,815)   (718,040)     (123,148)  (1,156,108)

          PROVISION (BENEFIT)
            FOR INCOME
            TAXES   . . .    (146,565)   (254,276)      (48,856)    (429,527)
                          -----------   ----------   ----------  -----------

              Net income
               (loss) . .   $(220,250)  $(463,764)     $(74,292)   $(726,581)
                          ===========   =========    ==========  ===========

              Basic income
               (loss) per
               common
               share  . .      $(0.11)     $(0.23)       $(0.04)      $(0.37)
                          ===========   =========    ==========  ===========

              Diluted income
               (loss) per
               common
               share  . .      $(0.11)     $(0.23)       $(0.04)      $(0.37)
                          ===========   =========    ==========  ===========

          Shares used in
            computing net
            income (loss)
            per share:

              Basic . . .   1,995,577   1,978,500     1,993,178    1,979,213
                          ===========  ==========   ===========  ===========

              Diluted . .   1,995,577   1,978,500     1,993,178    1,979,213
                          ===========  ==========   ===========  ===========


                   See accompanying notes to financial statements.


                                       -2- 
     <PAGE>


                   PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------------

              CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
              ---------------------------------------------------------

                     FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
                     --------------------------------------------

                                      UNAUDITED
                                      ---------

                                                                 
                                 COMMON STOCK
                                 ------------       ADDITIONAL      STOCK
                                                     PAID-IN-    SUBSCRIPTION
                                SHARES    AMOUNT      CAPITAL     RECEIVABLE
                                ------    ------    -----------   ----------


          BALANCE, DECEMBER
            31, 1997          1,997,500  $79,900    $13,644,228            -

          Net loss                    -        -              -            -

          Issuance of common
            stock               162,500    6,500        812,500    ($812,500)

          Purchase of
            treasury stock            -        -              -            -
                              ---------  -------    -----------  -----------


          BALANCE, SEPTEMBER
            30, 1998          2,160,000  $86,400    $14,456,728    ($812,500)
                              =========  =======    ===========  ===========





                                 ACCUMULATED         TREASURY
                                  (DEFICIT)           STOCK        TOTAL
                                 ----------          --------      -----
          BALANCE, DECEMBER
            31, 1997           ($6,049,080)         $(29,365)   $7,645,683

          Net loss                (726,581)                -      (726,581)

          Issuance of common
            stock                                                    6,500

          Purchase of
            treasury stock               -           (21,240)      (21,240)
                             -------------      ------------    ----------


          BALANCE, SEPTEMBER
            30, 1998           ($6,775,661)         ($50,605)   $6,904,362
                             =============      ============    ==========


                   See accompanying notes to financial statements.



                                       -3-
     <PAGE>


                   PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------------

                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                        -------------------------------------

                       FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                       ---------------------------------------

                                      UNAUDITED
                                      ---------


                                                  1997          1998
                                              ------------   -----------

          CASH FLOWS FROM OPERATING ACTIVITIES:
          Net income (loss)                    $   145,958   $  (726,581)
          Adjustments to reconcile net income
            (loss) to net cash provided by
            operating activities:
               Deferred income taxes                    --      (484,388)
               Depreciation                      3,790,698     3,314,312
               Amortization of discounts on
                 investments                       (97,183)      (26,953)
               Amortization of goodwill                 --        36,189
               Changes in operating assets
                 and liabilities:
                    Accounts receivable         (2,068,633)     (816,861)
                    Other assets                   (72,092)     (248,007)
                    Accounts payable              (592,571)     (101,844)
                    Accrued expenses                42,846        55,426
                                               -----------   -----------

          Net cash provided by operating         1,149,023     1,001,293
            activities                         -----------   -----------

          CASH FLOWS FROM INVESTING ACTIVITIES:

             Purchase of equipment for direct
               finance leases and sales-type
               leases                          (25,381,098)   (9,411,901)
             Termination of direct finance
               leases                            4,236,465     3,159,587
             Proceeds applied to direct
               finance leases and sales-type
               leases                            5,012,761    13,263,485
             Purchase of equipment for
               operating leases                    (41,333)   (6,930,505)
             Termination of operating leases            --       251,168
             Residual value sharing
               arrangements                      4,628,698     1,885,530 
             Payment for acquisition of
               Deltaforce, net of cash
               acquired                                 --      (777,348)
             Purchases of investments          (10,156,296)   (3,084,593)
             Proceeds from sale/maturity of      8,940,000     6,636,003
               investments                     -----------   -----------

          Net cash (used in) provided by       (12,760,803)    4,991,426
            investing activities               -----------   -----------

          CASH FLOWS FROM FINANCING ACTIVITIES:
             Net proceeds from sale of common
              stock                                     --         6,500
             Repurchase of common stock            (18,574)      (21,240)
             Proceeds from notes payable         3,578,697     2,332,552
             Repayment of notes payable             (1,110)   (1,077,515)
             Decrease in amounts due on
              purchases of equipment for
              leases                           (17,448,765)     (649,777)
             Increase in non-recourse lease
              financing                         32,192,094    13,509,866
             Termination of non-recourse
              lease financing                     (885,700)   (2,864,077)
             Repayments and interest
              amortization applied to           (8,616,519)  (16,257,272)
              non-recourse lease financing     -----------   -----------

          Net cash provided by (used in)         8,800,123    (5,020,963)
            financing activities               -----------   -----------

          Net increase (decrease) in cash and
            cash equivalents                    (2,811,657)      971,756

          CASH AND CASH EQUIVALENTS,             3,700,774     2,209,649
            beginning of period                -----------   -----------

          CASH AND CASH EQUIVALENTS, end of     $  889,117    $3,181,405
            period                             ===========   ===========

          SUPPLEMENTAL CASH FLOW INFORMATION:
            Cash paid for income taxes          $   28,210    $   73,285
                                               ===========   ===========
            Cash paid for interest              $1,328,337    $2,018,903
                                               ===========   ===========


                   See accompanying notes to financial statements.


                                       -4-
     <PAGE>

                   PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------------

                 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                 ----------------------------------------------------


          1.   The accompanying unaudited consolidated financial statements
               have been prepared in accordance with the instructions for
               Form 10-Q and Regulation S-X related to interim period
               financial statements and, therefore, do not include all
               information and footnotes required by generally accepted
               accounting principles.  However, in the opinion of
               management, all adjustments (consisting of normal recurring
               adjustments and accruals) considered necessary for a fair
               presentation of the financial position of Paramount
               Financial Corporation and subsidiaries (the "Company") at
               September 30, 1998 and its results of operations and cash
               flows for the three and nine months ended September 30, 1997
               and 1998, respectively, have been included.  The results of
               operations for the interim periods are not necessarily
               indicative of the results that may be expected for the
               entire year.  Reference should be made to the annual
               financial statements, including footnotes thereto, included
               in the Company's Form 10-K for the fiscal year ended
               December 31,1997.

          2.   The financial statements for the three and nine months ended
               September 30, 1998 are consolidated to include the results
               of the Company's two wholly owned subsidiaries, Paratech
               Resources, Inc. and Deltaforce Personnel Services, Inc
               ("Deltaforce").  All material intercompany balances and
               transactions have been eliminated.

          3.   On January 9, 1998, the Company acquired 100% of the
               outstanding shares of Deltaforce, a privately held New York
               City-based staffing company, for approximately $723,000,
               which included $325,000 of notes payable.  The acquisition
               was accounted for as a purchase and accordingly the
               operating results of Deltaforce have been included in the
               Company's consolidated statements since the date of the
               acquisition.  The excess of the aggregate purchase price
               over the fair market value of the net assets acquired of
               approximately $626,000 has been recorded as goodwill and is
               being amortized over 15 years.

          4.   In April 1998, the Company entered into a term loan with a
               bank collateralized by $600,000 in cash maintained in an
               investment account.  Principal payments of approximately
               $41,600 and interest are due on a quarterly basis through
               April 20, 2001.

          5.   Effective May 19, 1998 the Board of Directors approved a
               reduction of the authorized number of shares of common stock
               from 35,000,000 to 17,500,000 and authorized a one-for-four
               reverse stock split of the Company's common stock.  The par
               value of the common stock was increased from $.01 to $.04
               per share.  Accordingly, all references in the financial
               statements and notes to common share data have been adjusted
               to reflect the reverse stock split.  Preferred stock
               remained unchanged.

          6.   On July 28, 1998, Deltaforce acquired certain assets from
               RBW Staffing Resources, Inc., ("RBW") a privately held New
               York City-based staffing company, for approximately
               $325,000, which included $100,000 of notes payable.  The
               acquisition was accounted for as a purchase and accordingly
               the operating results of RBW have been included in the
               Company's consolidated statements since the date of the
               acquisition.  The excess of the aggregate purchase price
               over the fair market value of the net assets acquired, net
               of direct costs and expenses associated with the
               acquisition, of approximately $440,000 has been recorded as
               goodwill and is being amortized over 15 years.  In
               connection with this acquisition, Deltaforce entered into
               noncompete agreements with two key executives of RBW for an
               aggregate consideration of $460,000, $60,000 of which was
               paid at closing with $150,000 due on July 28, 1999 and
               $250,000 due on July 28, 2000.  In addition, simultaneous
               with the closing of the transaction, the Company entered
               into a stock purchase agreement with the former shareholder
               of RBW (the "Shareholder").  Under the terms of this
               agreement, the Company sold 162,500 shares of newly issued
               $.04 par value common stock to the Shareholder as follows:
               (1) 81,250 shares at $4.00 per share, and (2) 81,250 shares
               at $6.00 per share.  The Shareholder paid for the stock with
               cash equal to the par value of the shares issued, $6,500,
               and by the issuance of two non-recourse secured promissory


                                       -5-
     <PAGE>


               notes repayment of which is secured by the shares under a
               stock pledge agreement.  The notes mature on July 27, 2000
               and July 27, 2001, respectively.  Deltaforce also entered
               into an employment agreement with the Shareholder for a term
               of 24 months including a one-time sign-on bonus paid at
               closing.

          7.   On October 23, 1998, the Company acquired 100% of the
               outstanding shares of Abbey, Garrett and Seth, Ltd. (dba:
               Comptech Resources), a privately held, Garden City based
               systems consulting, software applications and Internet
               commerce development firm.  The acquisition will be
               accounted for as a purchase; accordingly the purchase price
               will be allocated to the underlying assets and liabilities
               based on their respective estimated fair values at the date
               of acquisition.



                                       -6-

     <PAGE>

                         MANAGEMENT'S DISCUSSION AND ANALYSIS
                   OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


               The following discussion and analysis should be read in
          conjunction with, and is qualified in its entirety by, the
          unaudited financial statements, including the notes thereto,
          appearing elsewhere in this 10-Q.

          GENERAL

               Paramount Financial Corporation and subsidiaries
          ("Paramount" or the "Company") is a comprehensive asset
          management and business solution provider, offering customers a
          wide range of integrated services, including lease finance,
          information technology ("IT") consulting, network design and
          implementation, and staffing services.  The Company includes two
          wholly owned subsidiaries, Paratech Resources, Inc. ("Paratech"),
          and, as of January 1998, Deltaforce Personnel Services, Inc.
          ("Deltaforce").  

               During the nine months ended September 30, 1998, the Company
          continued with its strategic diversification and expansion plans. 
          In January, the Company completed the acquisition of Deltaforce,
          a privately held New York City based staffing company
          specializing in legal support staff. This acquisition further
          enhanced the Company's product offerings by including staffing
          services to its expanding list of integrated services.  This
          acquisition was followed closely by the acquisition of RBW
          Staffing Services, Inc. ("RBW"), another New York City based
          staffing company.  Following this second acquisition, the Company
          merged the operations of RBW into Deltaforce.  The combined
          company now offers not only temporary legal support staff, but
          also temporary and permanent IT, attorney and paralegal
          placements. 

               In addition to the Deltaforce and RBW acquisitions, during
          the nine months ended September 30, 1998, the Company continued
          to invest in the expansion of its systems integration subsidiary,
          Paratech Resources, Inc. Paratech continues to move ahead with
          its growth plans in both personnel and product offerings.  Both
          Paratech and Deltaforce are important parts of the evolution of
          Paramount from a lease finance company to a diversified business
          solution provider.  When comparing the first nine months of 1998
          with the first nine months of 1997, it is important to note that
          Deltaforce was not part of the Company in 1997 and Paratech was a
          relatively insignificant part of the Company for the first
          quarter of 1997.  In addition, as a result of the acquisitions of
          Deltaforce and RBW the Company incurred a number of one-time, non
          repetitive charges during the nine months ended September 30,
          1998 that had a negative impact of the Company's consolidated
          results from operations for the period. 

               In October 1998, the Company completed the acquisition of
          Abbey, Garrett & Seth, Ltd. (dba: Comptech Resources)
          ("Comptech"), a systems consulting, software application and
          Internet commerce development firm.   Comptech brings a
          specialization in client-server accounting, sales-force
          automation, web development and e-commerce applications, which
          when combined with Paratech's systems integration and consulting
          services, enables the Company to offer a full complement of
          state-of-the-art technology solutions.  

               The Company remains committed to the growth of its lease
          portfolio and continued to engage in this activity during the
          nine months ended September 30, 1998.  The Company believes that
          continued expansion of the portfolio of IT equipment on lease
          will create financial benefits over a continuum of time, since,
          unlike other equipment, IT equipment is frequently upgraded
          and/or enhanced during the term of its lease, resulting in
          opportunities to lease new equipment and market displaced
          equipment.  Further, as an integrated lessor and business
          solution provider, the Company believes that it is well
          positioned to meet the ever-changing needs of its customers.

          Fluctuations in Quarterly Results
          ---------------------------------

               The operating results of Paramount are subject to quarterly
          fluctuations resulting from a variety of factors, including the
          volume of new leases written, product announcements by
          manufacturers, economic conditions, interest rate fluctuations
          and variations in the mix of leases written.  In addition, the


                                       -7-
     <PAGE>


          Company's revenue can fluctuate significantly from quarter to
          quarter based on the closing date and nature of each particular
          lease and/or sales transaction.  The mix of leases written in a
          quarter is a result of a combination of factors, including
          changes in customer demands and/or requirements, new product
          announcements, price changes, changes in delivery dates, changes
          in maintenance policies and pricing policies of equipment
          manufacturers and price competition from other lessors.  

               Leasing transactions (other than sales type leases), in
          general, do not provide for significant earnings in the month of
          lease origination.  Instead, revenue, expense and profit from
          lease transactions are recorded over the life of the asset and
          the lease.  Lease revenue and lease expense recognition is
          dependent upon a number of factors, including the term of the
          lease, the accounting classification of the lease (i.e.
          operating, direct finance, or sales type) and the commencement
          date of the lease and the lease financing within a particular
          period.  See "Lease Accounting." 

               The Company is aggressively working to maximize the returns
          on the residual value investments made on its lease portfolio. 
          Such efforts, which are an ordinary but not a predictable part of
          the Company's business, often result in equipment originally
          leased under an operating lease, and accounted for as described
          below, being upgraded or otherwise enhanced and extended at the
          original account or leased to a different end-user.  The
          resulting lease may qualify under FAS 13 as a sales type lease,
          in which the Company can record as sales revenue the fair market
          value of the equipment and recognize as income the difference
          between this amount and the equipment's cost or net book value. 
          Since a sales type lease is a form of direct finance lease, the
          new lease is recorded over its remaining term as a direct finance
          lease resulting in a reduction of lease rental income and lease
          expense compared to the original operating lease accounting.  

               Marketing efforts may also result in the sale of the leased
          asset to the customer which will result in an increase in revenue
          and, to the extent the sales proceeds exceed the net book value,
          net income, in the quarter in which the sale occurs.  Any such
          sale will also result in a reduction of revenue, expense and
          profit expected in subsequent quarters since the equipment was
          sold.

               Given the possibility of such fluctuations as described
          above, the Company believes that comparisons of the results of
          its operations for preceding quarters are not necessarily
          meaningful and that such results for one quarter should not be
          relied upon as an indication of future performance.

          Lease Accounting
          ----------------

               In accordance with Statement of Financial Accounting
          Standard No. 13, "Accounting for Leases" ("FAS 13"), the Company
          classifies its leases as either operating leases or direct
          finance leases.  The allocation of income among accounting
          periods within a lease term will vary depending upon the lease
          classification, as described below.

               Direct Finance Leases: Direct finance leases transfer
          substantially all benefits and risks of equipment ownership to
          the lessee.  A lease is a direct finance lease if it meets one of
          the following criteria: (1) the lease transfers ownership of the
          equipment to the lessee by the end of the lease term; (2) the
          lease contains a bargain purchase option; (3) the lease term at
          inception is at least 75% of the estimated economic life of the
          leased equipment; or (4) the present value of the minimum lease
          payments is at least 90% of the fair value of the leased
          equipment at lease inception. 

               At lease inception, the cost of equipment under a direct
          finance lease is recorded as "Net investment in direct finance
          leases". The difference between the gross lease payments
          receivable, plus the estimated residual value of the equipment,
          and the equipment cost is recognized as income over the life of
          the lease using the effective interest method.

               A lease transaction which meets all of the above criteria,
          and in which the Company has made a dealer's profit, is recorded
          as a sales type lease.  A sales type lease is a type of direct
          finance lease, but one in which the Company recognizes, at lease


                                       -8-
     <PAGE>


          inception, revenue and profit which arises from the difference
          between the fair market value of the leased equipment and its
          acquisition cost.

               Operating Leases: All lease contracts which do not meet the
          criteria of direct finance leases are accounted for as operating
          leases.  Monthly lease payments are recorded as operating lease
          revenue.  Leased equipment is recorded at the Company's cost and
          depreciated on a straight-line basis over the lease term to the
          estimated residual value at the expiration of the lease term. 


          RESULTS OF OPERATIONS

          THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS
          ENDED SEPTEMBER 30, 1997

               Net loss for the three months ended September 30, 1998 was
          $464,000, after a benefit for income taxes of $254,000, as
          compared with a net loss of $220,000 after a benefit for income
          taxes of $147,000 for the comparable period in 1997.

               For the three months ended September 30, 1998, the Company
          recorded sales revenue of $9.6 million, a $3.8 million decrease
          over the $13.4 million recorded during the three months ended
          September 30, 1997.  The decrease is primarily a result of the
          transactional nature of the Company's leasing business and the
          resulting quarterly fluctuations.  See "General" and
          "Fluctuations in Quarterly Results."  Additionally, Paratech's
          revenue decreased in the quarter by 11% to $935,000 when compared
          with 1997.  The decrease in sales at Paratech is a result of the
          Company's efforts to de-emphasize low margin, high volume
          hardware sales and increase higher margin, lower volume services
          revenue.  DeltaForce, which was not part of the Company in 1997,
          contributed $1.4 million in revenue during the quarter.

               As a result of the Company's ongoing marketing efforts with
          respect to its lease portfolio, certain assets which were
          recorded as operating leases during the first, second and third
          quarters of 1997, have been upgraded and re-leased, providing the
          Company with a return on its residual value investment.  The
          resulting lease has been accounted for as a sales type lease.  As
          a result of this activity, the effect of accounting for a lease
          as a direct finance lease versus an operating lease, net of new
          leases written in the third quarter, lease revenue and lease
          expense decreased for the three months ended September 30, 1998
          when compared to the three months ended September 30, 1997 by
          32.1% and 31.2%, respectively.  See "Fluctuations in Quarterly
          Results" and "Lease Accounting." 

               During the three months ended September 30, 1998, the
          Company entered into new lease transactions totaling $4.7 million
          of equipment cost as compared with $12.1 million for the three
          months ended September 30, 1997. See "General," "Fluctuations in
          Quarterly Results" and "Lease Accounting."  During the quarter
          ended September 30, 1998, the Company entered into $3.0 million
          of non-recourse lease financing arrangements, as compared with
          $309,000 for the three months ended September 30, 1997.  See
          "Liquidity and Capital Resources." 

               During the three months ended September 30, 1998, the
          Company generated $113,000 in fee, interest and other income,
          compared to $77,000 for the comparable period last year. 
          Generally, fee income is generated as a result of the Company's
          involvement in certain transactions in which it acted as an
          arranger of financing for leases originated by third parties, or
          otherwise assisted these companies in their lease related
          transactions.  These transactions come about as a result of the
          Company's relationship with other lessors and financial
          institutions.  The Company cannot predict with any certainty the
          timing and nature of any future such transactions.  See
          "General."

               Selling, general and administrative expenses ("SG&A")
          totaled $1.5 million for the three months ended September 30,
          1998, representing an increase of 36.0% over the $1.1 million
          recorded during the three months ended September 30, 1997.  The
          increase in SG&A is a result of the acquisition of Deltaforce and
          RBW, which contributed $658,000 to the total increase, as well as
          the continued growth Paratech, which contributed $330,000.   In


                                       -9-
     <PAGE>


          addition, included in the SG&A expense for the three months ended
          September 30, 1998, was $180,000 of one time charges related
          specifically to the acquisition of RBW. See "General." 

               The tax benefit of $254,000 for the three months ended
          September 30, 1998 reflects the standard rate for federal and
          state taxes.  During the three months ended September 30, 1997,
          the Company recorded a tax benefit of $147,000, reflecting the
          same standard tax rate.

          NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS
          ENDED SEPTEMBER 30, 1997

               Net loss for the first nine months of 1998 was $727,000,
          after a benefit from income taxes of $430,000, as compared with
          net loss of $74,000, after a benefit for income taxes of $49,000.
           
               For the nine months ended September 30, 1998, the Company
          recorded sales revenue of $26.0 million, a $5.9 million increase
          over the $20.1 million recorded during the nine months ended
          September 30, 1997.  The majority of the sales volume in 1998 was
          a result of marketing activities within the Company's existing
          lease portfolio.  In addition, Paratech's sales volume increased
          by 36.9% to $3.5 million and Deltaforce contributed $2.7 million
          in revenue.  These factors contributed to the increase in revenue
          as compared with the nine month period in 1997.  See
          "Fluctuations in Quarterly Results."

               As a result of the Company's ongoing marketing efforts with
          respect to its lease portfolio, certain assets which were
          recorded as operating leases during the third quarter of 1997,
          have been upgraded and re-leased, providing the Company with a
          return on its residual value investment.  The resulting lease has
          been accounted for as a sales type lease.  As a result of this
          activity, and the effect of accounting for a lease as a direct
          finance lease versus an operating lease, lease revenue and lease
          expense each decreased for the nine months ended September 30,
          1998 when compared to the nine months ended September 30, 1997 by
          32.5%.  See "Fluctuations in Quarterly Results" and "Lease
          Accounting." 

               During the nine months ended September 30, 1998, the Company
          entered into new lease transactions totaling $16.3 million of
          equipment cost as compared with $37.5 million for the nine months
          ended September 30, 1997.  Of the total cost of equipment leased
          during the quarter ended September 30, 1998, $9.4 million were
          recorded as direct finance leases, and $6.9 million were recorded
          as operating leases, compared to $37.5 million and $41,000
          respectively, for the quarter ended September 30, 1997. See
          "General", "Fluctuations in Quarterly Results" and "Lease
          Accounting."  During the nine months ended September 30, 1998,
          the Company entered into $13.5 million of non-recourse lease
          financing arrangements, as compared with $32.5 million for the
          nine months ended September 30, 1997.  See "Liquidity and Capital
          Resources."  Non-recourse debt entered into during the nine
          months ended September 30, 1997 increased at a faster rate than
          new lease origination as a result of the timing of the closing of
          certain large lease transactions.  Of the total amount of non-
          recourse debt, $13.3 million related to leases that commenced in
          December 1996, but for which the Company was not required to pay
          for the equipment until January 1997. 

               During the nine months ended September 30, 1998, the Company
          generated $573,000 in fee, interest and other income, compared to
          $858,000 for the comparable period last year. Generally, fee
          income is generated as a result of the Company's involvement in
          certain transactions in which it acted as an arranger of
          financing for leases originated by third parties, or otherwise
          assisted these companies in their lease related transactions. 
          These transactions come about as a result of the Company's
          relationship with other lessors and financial institutions.  The
          Company cannot predict with any certainty the timing and nature
          of any future such transactions.  

               S,G&A expenses totaled $3.7 million for the nine months
          ended September 30, 1998, representing an increase of 41.8% over
          the $2.6 million recorded during the nine months ended September
          30, 1997.  The increase in SG&A is a result of the acquisition of
          Deltaforce and RBW, which contributed $1.1 million to the total
          increase, as well as Paratech, which contributed $991,000 to SG&A
          expenses.  In addition, included in the SG&A expense for the nine


                                       -10-
     <PAGE>


          months ended September 30, 1998, was $180,000 of one time charges
          related specifically to the acquisition of RBW. See "General."

               The tax benefit of $430,000 for the nine months ended
          September 30, 1998 reflects the standard rate for federal and
          state taxes.  During the nine months ended September 30, 1997,
          the Company recorded a tax benefit of $49,000, reflecting the
          same standard tax rate.


          LIQUIDITY AND CAPITAL RESOURCES

               As of September 30, 1998, the Company had $3.2 million in
          cash and cash equivalents.  Substantially all of this amount was
          invested in interest-bearing savings accounts, money market
          accounts established by major commercial banks or in United
          States Government or other AA rated obligations.  Primarily as a
          result of the acquisition of Deltaforce and RBW, the continued
          investment in Paratech and the Company's continuing investment in
          its portfolio of IT equipment on lease, the Company experienced a
          reduction in net cash and investments available for sale during
          the first three quarters of 1998. 

               The Company's leasing business generates cash primarily from
          the marketing of equipment within its portfolio, and uses cash to
          acquire computer equipment to put on lease.  In addition, the
          Company's leasing business generates cash from fee related
          transactions.   The Company finances substantially all of its
          leases by discounting the payment stream on a non-recourse basis
          through various banks and financial institutions. Thus, the only
          cash required in these lease transactions is the residual value
          investment by the Company.  The Company believes that it
          currently has sufficient resources to make the residual value
          investments required to grow its lease portfolio.  In addition,
          the Company has numerous options available to finance residual
          value investments, including sales of equipment on lease to
          equipment investors, residual value sharing arrangements,
          recourse loans and non-recourse loans.  The Company intends to
          use, on an opportunistic basis, all such available resources in
          order to maximize its portfolio of equipment on lease.    

               The Company continues to fund the growth of Paratech.  In
          addition, the Company is seeking to expand Paratech's operations
          through both acquisitions and internal growth.  Since Deltaforce
          is now an established operation, the Company does not anticipate
          investing significant additional cash in this business.  However,
          in order to expand Deltaforce's operations, which the Company is
          aggressively seeking to accomplish, the Company will need to
          utilize its cash balances to fund potential future acquisitions. 
          The Company is limited to its current cash balances for funding
          such add-on acquisitions and internal growth, unless the Company
          is able in the future to raise significant additional financing. 
          There can be no assurance that the Company will be able to raise
          any such financing.  Further, the Company's cash funds for
          acquisitions might be limited to the extent that the Company's
          current operations or the operations of any future acquisitions
          require the funding of losses or the incurence of capital outlay. 

               During the nine months ended September 30, 1998, the Company
          entered into several residual value sharing and financing
          arrangements with an equipment investor totaling $2.3 million. 
          This investor (i) purchased a portion of the Company's residual
          value of equipment on lease in exchange for the right to share in
          remarketing proceeds generated from the equipment on lease, and
          (ii) provided recourse financing for the remaining portion of the
          Company's residual value investment.  The equipment on lease and
          the related leases serve as collateral for these financings. 
          During the nine months ended September 30, 1998, in connection
          with the early extension of leases, the Company repaid $849,000
          of such loans using the proceeds of these extensions.  The
          Company expects to repay the balance of these loans through the
          proceeds generated from remarketing the subject equipment in the
          future.  These transactions allow the Company to continue to grow
          and expand its lease portfolio without significantly affecting
          its current cash balances.

               At September 30, 1998, the Company had four types of credit
          lines available:


                                       -11-
     <PAGE>


               Equipment Bridge Financing Lines: These lines allow the
          Company to borrow up to $1.25 million in the aggregate and are
          secured by equipment and contracts to sell or lease that
          equipment.  Borrowings under these lines bear interest at 1%
          above the prime rate.  In addition, one of these lines offers the
          Company the ability to borrow up to $100,000 on an unsecured
          basis.  The purpose of these credit lines is to allow the Company
          to pay its suppliers on a timely basis while waiting for the
          customer to pay or for the non-recourse financing to occur. 
          During the quarter ended September 30, 1998, the Company did not
          borrow any amounts from these lines, and accordingly had nothing
          outstanding as of September 30, 1998.  As a result of its cash
          balances, the Company has been able to internally finance its
          equipment purchases.

               Lease Finance Line:  This line allows the Company to borrow
          up to $1 million to permanently finance, on a recourse basis, the
          rental streams under certain lease transactions pledged as
          collateral.  The facility is secured by the individual leases
          pledged and the associated equipment.   The Company is required
          to maintain certain financial ratios.  Borrowings are financed at
          a fixed rate spread over the US Treasury bill at the time of
          funding.  As of September 30, 1998, the Company had $179,000
          outstanding under this line.

               Term Loan:  In April 1998, Paramount entered into a $500,000
          term loan with a bank collateralized by $600,000 in cash
          maintained in an investment account.  Principal payments of
          approximately $41,600 and interest are due on a quarterly basis
          through April 20, 2001. 

               Deltaforce Revolving Credit Facility:  Deltaforce has a
          $500,000 revolving line of credit agreement with a bank secured
          by accounts receivable which expires on January 11, 1999. 
          Interest on outstanding borrowings accrues at the bank's prime
          rate plus 1%.  Borrowings are limited to 80% of eligible accounts
          receivable.  As of September 30, 1998, Deltaforce had $500,000
          outstanding under this line.  In October of 1998, this line was
          increased to $750.000.

               During the year ended December 31, 1997, the Board of
          Directors of the Company approved a plan that would allow for the
          repurchase of up to $500,000 worth of Common Stock of the
          Company.  The repurchase program took effect immediately and is
          authorized to continue for a period of two years.  Subject to
          applicable rules, the plan allows the Company to repurchase
          shares at any time during the authorized period in any increments
          it deems appropriate.  During the first three quarters of 1998,
          the Company repurchased 12,000 shares for a purchase price of
          $21,240


          FORWARD LOOKING STATEMENTS AND ASSOCIATED RISK

               Statements contained in this Form 10-Q which are not
          historical facts are forward-looking statements.  The Forward-
          looking statements in this Form 10-Q are made pursuant to the
          safe harbor provisions of the Private Securities Litigation
          Reform Act of 1995.  Forward-looking statements made herein
          contain a number of risks and uncertainties that could cause
          actual results to differ materially.  These risks and
          uncertainties include, but are not limited to, the specific
          factors impacting the Company's business discussed under the
          caption "General", as well as increased competition; the
          availability of computer equipment; the ability of the Company to
          expand its operations and attract and retain qualified sales
          representatives experienced in the purchase, sale and lease of
          new and used computer equipment; the ability of the Company to
          attract and retain IT professionals skilled in specific
          applications; technological obsolescence of the Company's
          portfolio of computer equipment; competition in the IT consulting
          sector and general economic conditions.


                                       -12-
     <PAGE>

                             PART II:  OTHER INFORMATION


          ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

                    (a)  Exhibits.
                         --------

                         27.  Financial Data Schedule.

                    (b)  Reports on Form 8-K.
                         -------------------

                         None.


                                       -13-
     <PAGE>


                                      SIGNATURES


               Pursuant to the requirements 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.


                                       PARAMOUNT FINANCIAL CORPORATION



          Date:  November 13, 1998     By:    /s/ Paul Vecker                 
                                          ----------------------------------
                                          Paul Vecker, Senior Vice President
                                          and Chief Fiancial Officer


                                       -14-
     <PAGE>


                                 EXHIBIT INDEX


          Exhibit          Description
          -------          -----------

             27            Financial Data Schedule